Crypto Funds Could Manage as Much as $650B Within 5 Years, Bernstein Says
The crypto industry is expected to transition into a formal, regulated asset management industry from a ‘cottage industry’ with $50 billion of assets, the report said.
Sep 26, 2023 at 7:28 a.m. UTC
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CORRECTION (Sept. 26, 10:41 UTC): Corrects headline, first paragraph to refer to funds under management.
The crypto fund management business could have assets of as much as $650 billion within five years as the expected launch of spot-based bitcoin exchange-traded funds (ETFs) in the U.S. is likely to bring more capital to the market, broker Bernstein said in a research report Monday.
The current "cottage industry" has about $50 billion of assets under management, equivalent to about 4% of the present size of the crypto market, analysts led by Gautam Chhugani wrote. At press time, the total crypto market capitalization was $1.08 trillion.
The research comes months after the likes of BlackRock filed for a spot-based ETF with the U.S. Securities and Exchange Commission (SEC). Early this month, the regulator delayed making a decision on all of the spot ETF applications until October. The crypto market is hopeful that an eventual launch of spot-based ETFs will unlock the floodgates to mainstream money.
Bernstein expects demand to be driven by "investment advisors, wealth and private banking integrated products and easier access to ETFs in direct broker accounts."
That would imply a 10% ETF share for bitcoin (BTC) and ether (ETH) market cap and a 5-6% share for crypto hedge funds, the note said.
"Crypto financial adoption follows hype cycles, and we expect a hockey stick adoption, with 2024 as the landmark regulatory year for approval of ETFs," the report added.
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Will Canny is CoinDesk's finance reporter.