The Looming Crypto ETF Evolution: How SEC Approvals Will Fuel a 2026 Boom

The cryptocurrency investment landscape is undergoing a dramatic shift. Since January 2024, US spot crypto ETFs have attracted over $70 billion in net inflows, establishing traditional financial vehicles as the primary gateway for new capital into the burgeoning digital asset industry. This surge, initially driven by Bitcoin and Ethereum products, has now expanded to include Solana and XRP, validating the industry’s long-held belief that many investors will only engage with crypto through regulated structures familiar from stocks and bonds. A recent Schwab Asset Management survey revealed that 45% of ETF investors are planning to purchase crypto ETFs – a figure now equal to the interest in bond ETFs, signaling a significant mainstream acceptance.

The Coming Wave of Crypto ETFs: A New Challenge for Wealth Managers

However, the current influx is just the beginning. The SEC is expected to approve over 100 additional crypto ETFs in the coming year. This impending wave presents a new challenge for wealth managers. The decision-making process will evolve from a simple “own Bitcoin or not” question to navigating a complex landscape of dozens of single-asset products, each vying for dominance in the next market cycle.

Bitwise Chief Investment Officer Matt Hougan recently highlighted this difficulty, noting that many traditional investors lack strong opinions on decentralization or the nuances between Ethereum and Solana. Instead, they desire broad market exposure. Achieving this is becoming increasingly difficult as the market shifts from a handful of flagship Bitcoin ETFs to a crowded shelf of narrowly focused products demanding a level of due diligence that many advisory platforms are not equipped to handle.

The Rise of Crypto Index Solutions: A Simpler Path for Investors

Market observers believe this growing complexity will drive investors towards crypto index ETPs (Exchange Traded Products). These products package baskets of tokens into a single, listed security, offering diversification and simplifying portfolio construction. The category gained significant traction in September with Grayscale’s launch of the Grayscale CoinDesk Crypto 5 ETF, the first multi-asset crypto fund in the United States.

Since then, issuers have rolled out a range of competing products, including Bitwise’s BITW, 21Shares’ FTSE Crypto 10 Index ETF (TTOP) and its ex-Bitcoin version (TXBC), as well as offerings from Hashdex and Franklin Templeton. Roxanna Islam, Head of Sector and Industry Research at VettaFi, draws a parallel to the equity market, where investors often transition from individual stocks to broad index funds as an asset class matures. She adds that these new funds reflect a growing preference among advisors for simple, building-block portfolios.

Nate Geraci, President of Nova Dius Wealth, echoes this sentiment, stating he is “highly bullish” on the demand for these baskets, as they provide a “one-click” solution for allocators seeking to bypass the noise of individual token selection.

How Crypto Index Products are Constructed

Most multi-asset crypto index products employ a similar methodology in constructing their portfolios. They typically begin with free-float market capitalization and basic liquidity filters, naturally weighting the portfolio heavily towards Bitcoin and Ethereum, with smaller allocations to other tokens.

Grayscale’s Digital Large Cap Fund (GDLC) exemplifies this approach. According to its data, the fund allocates roughly three-quarters of its portfolio to Bitcoin and approximately 15% to Ethereum, with the remainder distributed among other assets: around 5% to XRP, just under 3% to Solana, and a little over half a percent to Cardano.

Crypto Index ETF Asset Weightings (Source: Bloomberg)

A holdings comparison compiled by Bloomberg illustrates the systematic nature of these funds. Across six major crypto baskets from Grayscale, Bitwise, and Hashdex, Solana and Cardano appear in every lineup. The inclusion of Cardano is particularly noteworthy, given its lack of a dedicated US spot ETF and its lagging performance compared to Solana and Ethereum in both metrics and market attention. Its presence can be attributed to its market capitalization and trading depth. According to CryptoSlate's data, Cardano is the 10th-largest crypto asset by market capitalization, with a market cap exceeding $13 billion, qualifying it for a small but consistent share of passive flows.

The Challenges of Crypto Index ETFs: Fees and Volatility

The simplicity of a single-ticker crypto index fund often comes at a cost. Many of these products charge fees exceeding 0.5% per year, significantly higher than the roughly 0.25% charged by spot Bitcoin ETFs and the single-digit basis points on broad equity trackers. This spread represents the cost of outsourcing rebalancing, a process that is rarely frictionless in digital asset markets.

Liquidity diminishes rapidly beyond the top three or four tokens, and index providers publicly disclose their methodologies and review calendars. This transparency allows professional traders to anticipate fund rebalancing activities and potentially profit from them, potentially leading index vehicles to buy high and sell low.

Furthermore, the basket construction creates a risk profile that differs from traditional equity indices. While diversification is generally considered safer than concentrated positions, historical data reveals that Bitcoin often exhibits lower volatility than smart-contract platforms like Ethereum and Solana.

Bitcoin vs. Ethereum Solana Price Performance YTD and Volatility (Source: Cryptorank)

Because most large-cap crypto indices are market-cap weighted, Bitcoin still dominates exposure. Smaller allocations to Ethereum, Solana, and other tokens add higher beta rather than a defensive offset. This can lead to outperformance in rising markets but faster declines during downturns.

What to Expect in 2026: A Shift Towards Diversified Beta

Despite the current preference for single-asset “winners,” the 2026 pipeline suggests issuers anticipate a behavioral shift. Bloomberg Intelligence ETF analyst James Seyffart expects crypto index ETPs to be a primary category for asset gathering next year. If US crypto ETF flows in 2026 match this year’s pace (already exceeding $47 billion in net inflows according to CoinShares), the CryptoSlate model estimates that a shift from single-stock picking to diversified beta could direct between 2% and 10% of that total into index products.

Based on this baseline, the implied range for crypto index ETF inflows looks like this:

Low (2%): $0.94 billion
Base (5%): $2.35 billion
High (10%): $4.70 billion

Islam believes this shift will occur out of necessity: “We will potentially see more inflows into crypto index ETFs as the number of crypto products becomes too overwhelming to easily perform comparative due diligence.”

In this scenario, the winners of 2026 are unlikely to be the funds with the flashiest short-term returns, but those that secure slots in major advisory firms’ model portfolios, where allocations become embedded and flows systematic. The future of crypto ETF investing is poised for a significant evolution, driven by the need for simplicity, diversification, and accessibility in a rapidly expanding market.

Mentioned in this article Bitcoin Ethereum Solana Cardano Bitwise Grayscale 21shares Matthew Hougan