The long-awaited crypto index exchange-traded funds (ETFs) have finally hit the market, but investors aren’t too excited about them. Franklin Crypto Index ETF (EZPZ) and Hashdex Nasdaq Crypto Index US ETF (NCIQ), two new funds, haven’t gotten much money flowing into them since they opened. This is in comparison to how well spot Bitcoin ETFs did earlier in the year. Even though these ETFs offer a broad way to invest in cryptocurrencies, they have had a hard time making a lot of money in their early days. Investors don’t seem to be moving their money yet, which could be because of legal uncertainty and the fact that the funds don’t have many different types of assets.
Low Inflows Compared to Bitcoin ETFs
Franklin Templeton started the Franklin Crypto Index ETF (EZPZ) on February 20. Its net assets have grown to about $2.5 million. On the other hand, Hashdex’s NCIQ, which came out on February 14, has just over $1 million. On the other hand, Franklin Templeton’s Franklin Bitcoin ETF (EZBC) had net inflows of almost $50 million on its first trade day in January 2024.
Limited Diversification
The great thing about these ETFs is that they can follow a broad crypto index. This way, investors can get exposure to various assets without buying and handling each separately. However, they can only hold Bitcoin (BTC) and Ether (ETH), so they can’t diversify. The assets in both funds are based on each cryptocurrency’s market value, meaning that Bitcoin takes up most of the holdings. On February 21, Bitcoin’s market cap was about $1.9 trillion, making it much bigger than other cryptocurrencies.
Future of Crypto Index ETFs
The fast start of the index-based ETFs may seem bad, but the future looks bright. Over time, these funds become more popular as institutions become more interested, regulations become more apparent and people look for a broader range of crypto investments. The SEC is considering applications for ETFs using more cryptocurrencies. This could lead to more funds, including altcoins, in 2025.
Conclusion
Currently, Bitcoin is still the most popular exchange-traded fund (ETF). However, as rules change, crypto index ETFs may become very popular in the financial world.
