Crypto ETFs to Overtake Precious Metals by 2025

Cryptocurrency ETFs are poised to surpass precious metals ETFs in total asset size by late 2025, according to State Street, the world's largest ETF service provider. This shift is driven by the increasing demand for digital token ETFs, which are expected to become the third-largest asset class in the $15 trillion ETF industry, behind stocks and bonds.

Frank Koudelka, the Global Head of ETF Solutions at State Street, has noted the unexpected rush in demand for cryptocurrency ETFs. He attributes this growth to the increasing interest from investment advisors and the reincorporation of commodities into diversified portfolios. The pace of adoption of digital assets into ETF structures has outpaced early expectations.

Precious metals ETFs, particularly the SPDR Gold Trust (GLD), have historically held a significant advantage. GLD, launched in 2004, is still the largest gold ETF backed physically, with around $85 billion in assets under management. However, State Street anticipates that cryptocurrency ETFs will soon outpace this, solidifying their position as a financial heavyweight.

The Securities and Exchange Commission (SEC) is expected to approve additional cryptocurrency ETFs this year, further propelling market expansion. Beyond Bitcoin and Ethereum, fund management firms are applying for ETFs based on alternative digital assets such as Solana (SOL) and Ripple’s XRP. By 2025, State Street expects ETFs based on the top ten cryptocurrencies by market capitalization to receive regulatory clearance, broadening accessibility for investors in the digital asset field.

This anticipated growth in cryptocurrency ETFs is expected to provide more standardized institutional and retail investment opportunities. ETFs represent a regulated, low-risk mode of gaining access to digital assets without holding them directly. This increased involvement from mainstream finance in the crypto space is likely to continue driving growth in the sector.

The broader acceptance of crypto ETFs also signals a shift in market sentiment, as digital assets become more established as part of a diversified investment portfolio. This could offer some stability in the volatile crypto space and raise confidence among investors.

The cryptocurrency ETF market is expected to continue growing as long as financial institutions and regulatory agencies work together to adapt to the evolving landscape of digital