Bloomberg Analyst Predicts Mass Crypto ETP Liquidations by 2027

TLDR

• Bloomberg analyst James Seyffart predicts over 100 crypto ETPs will launch in 2026, but many will close by 2027 due to lack of demand
• Over 126 crypto ETP applications currently await SEC approval, with issuers filing products rapidly under new generic listing standards
• In 2023, 244 ETFs closed in the US with an average age of 5.4 years, mostly due to insufficient inflows and low assets under management
• Spot Bitcoin ETFs have attracted $57.6 billion in inflows since January 2024, while Ethereum ETFs reached $12.6 billion since July 2024
• Two crypto ETPs already liquidated in 2024: ARK 21Shares Active Bitcoin Ethereum Strategy ETF and ARK 21Shares Active On-Chain Bitcoin Strategy ETF

Bloomberg analyst James Seyffart warns that most new crypto exchange-traded products launching in 2026 will likely shut down within a year. The prediction comes as over 126 ETP applications sit with the Securities and Exchange Commission awaiting approval.

The wave of new applications follows the SEC’s implementation of generic listing standards in September. These standards removed the requirement for case-by-case assessment of each application. The change has opened the door for asset managers to file ETFs tied to various tokens.

Why Most New Crypto ETPs Will Fail

The primary reason for expected closures is lack of investor demand. When ETPs fail to attract sufficient inflows, they maintain low assets under management. This makes them financially unviable for issuers to continue operating.

Historical data supports this pattern. Last year saw 622 ETF closures globally, including 189 in the United States. In 2023, 244 US ETFs closed with an average age of 5.4 years, according to Morningstar data from January 2024.

Two crypto ETPs have already liquidated this year. The ARK 21Shares Active Bitcoin Ethereum Strategy ETF and ARK 21Shares Active On-Chain Bitcoin Strategy ETF both shut down. These early closures signal the challenges facing newer products in the space.

Asset managers have filed applications for ETFs tracking increasingly speculative tokens. Some applications even include products tied to memecoins like Melania Trump’s token. This occurred before the SEC’s generic listing standards took effect.

Current Market Performance

Existing crypto ETPs show mixed results. Spot Bitcoin ETFs have accumulated $57.6 billion in inflows since launching in January 2024. Spot Ethereum ETFs have gathered $12.6 billion since July 2024, based on Farside Investors data.

ETFs tracking Litecoin, Solana, and XRP launched this year with relative success. These expanded the market beyond Bitcoin and Ethereum products. Spot Solana ETFs from six issuers including Bitwise, VanEck, and Fidelity have seen $725 million in inflows since late October.

The disparity between top performers and struggling products illustrates the competitive landscape. Bitcoin ETFs dominate with the highest inflows. However, many newer products targeting alternative cryptocurrencies face an uphill battle for market share.

The SEC’s streamlined approval process will likely accelerate product launches throughout 2026. However, the ease of launching new ETPs does not guarantee their survival. Investors typically concentrate their investments in a few leading products rather than spreading capital across many options.

Market observers expect the shakeout to separate viable products from those launched opportunistically. Products with strong issuer backing, competitive fees, and clear investment cases stand better chances of survival beyond 2027.

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