Both funds will track Bitcoin (BTC) and Ethereum (ETH). Analysts believe this approval will pave the way for a broader wave of crypto ETFs in 2025, including funds for Litecoin (LTC) and Hedera (HBAR). Grayscale's Bitcoin ETF hit $1 billion in inflows earlier this week, which means the demand for ETFs are still strong before the year ends. Meanwhile, social media chatter about "buying the dip" surged after Bitcoin's recent dip below $100,000.
Hashdex and Franklin Templeton Get SEC Nod for Crypto Index ETFs
The United States Securities and Exchange Commission (SEC) approved Hashdex’s Nasdaq Crypto Index U.S. ETF and Franklin Templeton’s Franklin Crypto Index ETF in a Dec. 19 notice. Hashdex’s ETF will be traded on the Nasdaq stock market, while Franklin Templeton’s ETF will be listed on the Cboe BZX Exchange. Both ETFs will include spot Bitcoin (BTC) and Ethereum (ETH).
Hashdex’s Nasdaq Crypto Index U.S. ETF will track Bitcoin and Ethereum included in the Nasdaq Crypto U.S. Settlement Price Index. Meanwhile, the Franklin Crypto Index ETF will follow the Institutional Digital Asset Index, which is designed to measure the performance of key digital assets like BTC and ETH.
The SEC’s approval was based on the similarities between these proposals and already approved spot Bitcoin and Ether products. The ETFs are also compliant with the Exchange Act's requirements to prevent fraudulent practices and protect investors.
Nate Geraci, president of The ETF Store, suggested that this approval could inspire other firms, including BlackRock, to follow suit and introduce similar products. Geraci believes that financial advisers are likely to embrace these offerings because of their diversification potential, especially in the budding crypto ETF asset class.
Franklin Templeton initially filed for its crypto index ETF in August, but the SEC delayed its decision in November. Hashdex submitted an amended ETF application in November after revising its proposal in October to address the SEC’s requirements. These two firms are not alone in their pursuit of crypto index ETFs. In November, NYSE Arca filed to list a Bitwise ETF holding Bitcoin and Ethereum, and in October, it shared plans to list a Grayscale crypto index ETF containing a broader range of digital assets.
Bitcoin-Ether Funds to Kickstart 2025 ETF Boom
These latest ETF approvals could open a lot of doors in the crypto industry. In fact, a whole new wave of crypto ETFs are anticipated to emerge in 2025, starting with funds tracking both Bitcoin and Ethereum.
Bloomberg senior ETF analyst Eric Balchunas shared this forecast on Dec. 17, alongside insights from fellow analyst James Seyffart. They predict that this Bitcoin and Ethereum combo fund will pave the way for ETFs tracking other cryptocurrencies, like Litecoin (LTC) and Hedera (HBAR).
The SEC has historically been cautious in approving crypto-related ETFs, and even recently rejected several proposals for Solana and XRP-focused funds. Seyffart believes that approval for these assets may only come under a new administration, specifically after President-elect Donald Trump’s SEC chair nominee assumes leadership. Trump announced plans to nominate Paul Atkins, a pro-crypto businessman and former SEC commissioner, as the agency’s next chair, which could signal a potential shift towards more crypto-friendly policies.
Litecoin’s potential for approval stems from its close relationship with Bitcoin as a fork, which makes it a lot more likely to be classified as a commodity. Hedera benefits from not being labeled a security by the SEC, which simplifies the regulatory path for its inclusion in an exchange-traded product as well. On the other hand, XRP and Solana faced some setbacks due to their classification as securities.
Despite the likelihood of approval for Litecoin and Hedera ETFs, analysts are still uncertain about the level of investor demand these products will attract. On the brightside, many people expect that Trump’s administration will encourage a much more supportive regulatory environment for digital assets.
Grayscale’s Bitcoin ETF Hits $1 Billion in Inflows
Some ETFs are already achieving impressive milestones before the year even comes to an end. Grayscale's Bitcoin ETF saw remarkable success in 2024 by pulling in over $1 billion in net inflows by Dec. 17.
The Grayscale Bitcoin Mini Trust was launched as part of a spinoff in July that now manages more than $4 billion in assets. Alongside the Bitcoin Mini Trust, Grayscale introduced the Ethereum Mini Trust, separating these low-cost offerings from its older and more expensive funds, the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE). The Mini Trusts also offer the most affordable management fees of just 0.15%.
The introduction of low-cost ETFs intensified competition in the market, and even led to fee wars among issuers. Most of the newly launched spot crypto ETFs, including Grayscale’s, temporarily waived or discounted fees to attract investors. Spot Bitcoin ETFs were launched in January after extensive review by the SEC, and have become dominant players. In fact, U.S. spot BTC ETFs surpassed $100 billion in net assets for the first time in November.
Grayscale also expanded its portfolio beyond just Bitcoin and Ethereum by managing a range of alternative cryptocurrency funds. In 2024, the asset manager introduced an investment fund for Aave’s governance token (AAVE) and launched trusts for Sky, Bittensor, and Sui protocol tokens. Grayscale also has plans to diversify its offerings, proven by its October filing with NYSE Arca to list the Grayscale Digital Large Cap Fund. This index ETF will hold a diversified portfolio of cryptocurrencies.
With President-elect Donald Trump’s administration expected to adopt a much more crypto-friendly stance, the landscape for cryptocurrency ETFs is poised for some very impressive growth.
Surge in "Buy the Dip" Chatter
Only time will tell if crypto prices will play along to help boost the 2025 ETF boom, especially after the lastest market dip. However, things may look up soon as the proportion of social media discussions about "buying the dip" in crypto surged to its highest level in over eight months, which coincided with Bitcoin's fall below the critical $100,000 price level.
According to data from crypto analytics firm Santiment, Bitcoin’s dip to $95,500 on Dec. 19 prompted the social dominance score for mentions of "buying the dip" to hit 0.061, which was its highest point since April 12. At press time, BTC was trading hands at $95,182.49 after its price fell by more than 6% over the past 24 hours.
Historically, similar spikes in the social dominance score have been associated with notable price drops. In April, Bitcoin fell from $70,000 to around $63,000, and in August, it slid below $60,000, nearing $53,000 within just a day. These events also aligned with increased mentions of "buying the dip." This suggests that investors and traders are very closely monitoring opportunities during market downturns.
Search interest for cryptocurrency is also robust, though it has tapered off slightly since December’s start. Google Trends data indicates a global search score of 75 for “crypto” over the past seven days, down from 100 earlier in the month. In contrast, searches for "buy the dip" surged to a score of 38, the highest since August 10.
Search volume for ‘buy the dip’ (Source: Google Trends)
Charles Edwards, the founder of Capriole Fund, warned that market participants should prepare for heightened volatility. Edwards pointed out that bearish sentiment could intensify to a point where it triggers a short squeeze, causing prices to rebound sharply.
