Crypto ETP Liquidations Likely by 2027, Analyst Warns
Bloomberg analyst warns many crypto ETPs could face liquidation by 2027 due to lack of investor demand.
- Over 100 crypto ETPs may launch by 2026 but not all will survive.
- Bloomberg’s Seyffart sees mass closures by 2027.
- Low demand and capital concentration are key concerns.
Bloomberg ETF analyst James Seyffart has sounded the alarm on the future of crypto exchange-traded products (ETPs). According to Seyffart, the market could see a wave of liquidations by the end of 2027. His warning follows a surge in new product filings, with more than 100 crypto ETPs expected to hit the market by 2026.
The reason for the potential shakeout? Lack of demand. While the SEC has made it easier for issuers to launch crypto-based ETPs through new listing standards, Seyffart cautions that not every product will attract enough investor interest to survive.
The Risk of Oversaturation in the ETP Market
Crypto ETPs offer exposure to digital assets like Bitcoin and Ethereum without direct ownership. But despite their growing popularity, investor capital tends to flow into a few leading products. This trend leaves smaller or niche ETPs struggling to attract assets under management (AUM).
Seyffart believes that many of these underperforming funds will ultimately be shut down. He compares the expected closures to patterns seen in the traditional ETF market, where funds with poor inflows often don’t last long. Without enough liquidity or investor support, dozens of these crypto ETPs could face liquidation within the next two years.
Survival of the Fittest: Only a Few Will Last
This upcoming wave of crypto ETP liquidations isn’t necessarily bad news for the industry. In fact, it may signal a maturing market. As more products enter the space, investors will have to be more selective. Only the strongest ETPs — likely those tied to major coins like Bitcoin and Ether — will be able to capture sustainable investor demand.
For now, the boom in new filings continues, but by 2027, the ETP market could look very different. Seyffart’s message is clear: while the opportunity is large, only a few players will dominate, and many others will be forced to exit.
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