New Crypto ETFs Are Coming in 2025. Should You Buy?

Cryptocurrency enthusiasts got pretty much everything they wanted in 2024. They got a crypto-friendly President-elect and Bitcoin at $100,000 (more or less). They also have new ways to participate in the cryptocurrency market – but more choices isn’t necessarily the same thing as better choices.

Freedom of choice is a good thing, of course. Earlier in 2024, the Securities and Exchange Commission (SEC) finally gave Americans the freedom to choose spot Bitcoin exchange traded funds (ETFs) from BlackRock, Fidelity, ARK Invest, and others.

Then, the SEC gave the green light to spot Ethereum ETFs, mainly from the same companies that offer spot Bitcoin ETFs. It’s not exactly the same thing as owning Bitcoin and Ethereum, but for the time being, these ETFs enable investors to indirectly participate in the blockchain revolution.

There will be a new President, SEC chairman, and Treasury secretary in 2025. Consequently, the number of cryptocurrency-related ETFs and similar financial products is likely to proliferate in the coming months.

Again, there’s nothing inherently wrong with having the freedom to choose among a large pool of available products. On the other hand, this means each individual investor is responsible for picking and choosing the best and discarding the rest.

Courtesy: @ki_young_ju

With the regime change, it shouldn’t be very long before spot cryptocurrency ETFs are available for Ripple, Solana, and other popular tokens. Bear in mind, however, that these ETFs, like other funds, will be managed by fund managers.

Plus, they’ll be subject to the same rules and restrictions that all ETFs are subject to. In contrast, cryptocurrencies aren’t managed by any particular government or fund manager. They’re decentralized and purposely limited in supply, so no one can just print up more units of Bitcoin, Ethereum, and so on.

In other words, if you prefer to diversify your portfolio to hold some financially “off-the-grid” assets, Bitcoin and Ethereum are obvious choices. Nothing against BlackRock, Fidelity, and so on, but their ETFs aren’t exactly “off the grid” like cryptocurrencies are.

Additionally, there’s the concern that the proliferation of cryptocurrency ETFs is already going too far, too fast. Already, before the year is over and the new President is in office, Strive Asset Management has applied to the SEC for a Bitcoin bond ETF.

Known as the Strive Bitcoin Bond ETF, this fund will invest in the convertible bonds of MicroStrategy and other Bitcoin-focused companies. One might wonder whether the average retail investor really understands the risks and volatility involved with this type of fund.

Also, Bitwise recently applied to the SEC to launch a Bitwise Bitcoin Standard Corporations ETF. Again, MicroStrategy would be a component of the fund, as this one would invest in businesses holding at least 1,000 Bitcoin.

Courtesy: @rover_crc

The surge of new Bitcoin-related financial products is all fine and well, as long as cryptocurrency prices aren’t crashing. However, Bitcoin and other cryptos will crash 30%, 40%, or even 50% from time to time.

That’s just the nature of a new, emerging technology like cryptocurrency. The adoption curve doesn’t go straight up, and there will be bumps and setbacks along the way.

My concern is that the bumps and setbacks will shake out retail investors, leading to the loss of capital. Bitcoin has been around since 2009 and has withstood all of its crashes so far, but the new ETFs will be untested.

And remember, there’s a big difference between investing in Bitcoin and buying shares of MicroStrategy and other Bitcoin-related businesses. Leadership can fail at any business, while Bitcoin has no leader and that’s part of what makes it attractive to some holders.

At the very least, please be sure to conduct your full due diligence before considering any new financial product. As the old saying goes, “Let the buyer beware,” and this is as true today as it has ever been.