"Up to $40 billion expected to flow into virtual asset ETFs next year"

Next year’s virtual asset (cryptocurrency) exchange-traded fund (ETF) market could grow rapidly with large capital inflows, analysts say. Changes in the interest rate environment and expanded institutional demand are identified as the key background factors.

On the 26th (local time), crypto-focused media Cointelegraph reported that Bloomberg ETF analyst Eric Balchunas expects about $15 billion of new capital to flow into the virtual asset ETF market next year. He said that if market conditions unfold favorably, inflows could expand to up to $40 billion.

He cited the Federal Reserve’s potential policy rate cuts as a major variable. Balchunas explained, "If expectations for rate cuts continue next year, investors’ interest in virtual asset ETFs will rise again."

He analyzed that ETF capital flows have been relatively stable even during the recent correction. He said, "Bitcoin (BTC) has fallen about 35% from its peak, but ETF capital outflows accounted for only 4% of the total," and added, "In some weeks net inflows even appeared, with ETF supply and demand playing a medium- to long-term price defense role."

He also emphasized expanded participation by large institutions such as pension funds, sovereign wealth funds, and investment advisory firms. Balchunas added, "These institutional funds will become a major source of capital exerting real influence in the virtual asset ETF market."