Analysts at State Street predict that cryptocurrency exchange-traded funds (ETFs) will surpass precious metals in North America by the end of 2025, cementing their position as the third-largest ETF asset class, behind equities and bonds.
Crypto ETFs Poised to Overtake Precious Metals
According to a report from the Financial Times, State Street analysts foresee significant growth in crypto ETFs, driven by increasing investor demand and regulatory developments. Frank Koudelka, State Street’s global head of ETF solutions, expressed surprise at the rapid adoption of crypto ETFs:
“We have been very surprised by the speed of growth of crypto. I expected there to be pent-up demand, but I didn’t expect it to be as strong as it was.”
Regulatory Developments Expected to Fuel Growth
State Street also anticipates that the U.S. Securities and Exchange Commission (SEC) will approve ETFs based on altcoins in 2025. Koudelka noted that “there are a lot of other coins out there that ETFs can potentially solve for.” Additionally, the firm expects the SEC to approve “in-kind” trading for crypto ETFs, which would allow investors to transact in crypto instead of cash, further enhancing liquidity and adoption.
Current Market Landscape
As of late February, there are 39 crypto ETFs in the U.S., collectively managing approximately $100 billion, according to ETF Database. BlackRock and Fidelity dominate the sector, with their crypto ETFs holding over $57 billion and $20 billion, respectively.
For comparison, North American precious metals ETFs, including the $85 billion SPDR Gold Trust, hold a combined $165 billion. However, State Street analysts predict that crypto ETFs will surpass this figure by the end of the year, marking a major shift in the asset class hierarchy.
With rapid adoption, increasing regulatory clarity, and strong institutional demand, crypto ETFs are on track to become the third-largest asset class in the U.S. by the end of 2025. If these projections hold true, digital assets will further integrate into traditional financial markets, reshaping investment strategies across the industry.
