TMX VettaFi writers Nick Wodeshick and Nick Peters-Golden kicked off 2026 with the first Bull vs. Bear discussion on foreign equities. In this version, writers Ben Hernandez and DJ Shaw delve into the world of digital assets — specifically, crypto ETFs.
It’s been over four years since ProShares debuted the first U.S. cryptocurrency ETF linked to bitcoin: the ProShares Bitcoin ETF (BITO). Bitcoin went on to hit a high of around $68,000 that year, but outdid itself in 2025 with a high of $126,000. Increased institutional adoption and the development of more crypto funds are wins that will help further the entire ETF marketplace. But are they just a passing fancy, or do they have staying power?
Ben Hernandez: Hey DJ (that was a rap song in 1984–way before your time)! Given that I’ve already dated myself, I’ve been accustomed to mostly covering traditional assets like bonds and precious metals. I’m all for the proliferation of ETF innovation and I think crypto ETFs can spur that product development. However, I’m going to play devil’s advocate in this scenario and be the bear. So I’m going to ruin the crypto ETF picnic and say that headwinds could hinder the space in becoming a long-term trend.
DJ Shaw: Hey Ben! I appreciate you kicking us off and playing the bear. I’m definitely taking the bull side here. While I understand the skepticism, I think what we’re seeing now is different from past crypto cycles that were largely driven by retail speculation and Twitter memes. The institutional adoption we’ve seen, with major asset managers entering the space, signals this is more than a passing trend. The infrastructure that’s been built and the regulatory clarity we’ve gained suggests crypto ETFs are here to stay. What headwinds are you seeing?
Round 1: Crypto Regulation
Hernandez: Before I build a bearish case (difficult to do since I’m personally a crypto advocate and investor), I do have to pay deference to the crypto industry for helping the ETF market to expand its opportunity set to digital assets. I think the prime opportunity in ETFs should be more focused on the blockchain ecosystem, especially given the regulatory tailwinds driven by the GENIUS Act as well as the more recent CLARITY Act.
Funds like the Amplify Blockchain Technology ETF (BLOK) or the Fidelity Crytpo Industry and Digital Payments ETF (FDIG) can help capture this future upside as institutional demand increases — a trend that supports the bullish crypto ETF case. However, I think ETFs specifically in cryptocurrencies may have a steeper hill to climb. It seemed like after the inception of the ProShares BITO ETF in the U.S., investor adoption would be more swift than a pop star named Taylor, but there are some obstacles the industry needs to shake off.
Popping the hood of BITO, we see that the fund contains bitcoin futures as well as swaps that can track the top cryptocurrency’s prices. The diehard crypto investor may immediately look at this and wonder: Should I pay the 95 basis points when commission-free platforms like Coinbase or Binance exist? While BITO has its advantages — crypto exposure via a regulated exchange and active management that could autonomously adjust the holdings to try and limit volatility — diehards may still turn the other way. It’s like ordering a car to your intended destination as opposed to driving yourself: You’ll get to where you want to go, but have to pay someone to do it and trust that person is a better driver than you are. Investors leery of the safety of crypto exchange regulation but who want crypto exposure as a satellite portfolio allocation may opt for direct exposure now that the regulatory framework is more developed. It’s still a latticework of regulation under various agencies, but it’s a far cry from the early days.
Speaking of which, the origin of cryptocurrencies was steeped in its decentralization. However, now crypto ETFs are coming under the auspices of the SEC and other regulatory watchdogs. That essentially removes the novelty of cryptocurrencies in the first place — a means of financial exchange without regulatory oversight, which led to the term “DeFi.” Are crypto ETFs defying DeFi?
Shaw: Ben, I’m with you on the blockchain ecosystem funds. BLOK and FDIG are solid ways to capture the infrastructure buildout, and I think those have a role to play alongside direct crypto exposure.
But here’s where I push back on your crypto ETF concerns. Yes, BITO charges 95 basis points for futures exposure, but look at what happened when spot ETFs launched in 2024. BlackRock’s iShares Bitcoin Trust ETF (IBIT) became the fastest-growing ETP by assets under management ever. That’s not because folks suddenly decided they loved paying fees. It’s because a massive pool of investors that couldn’t or wouldn’t touch traditional crypto exchanges finally got access through a vehicle they trust.
The regulatory framework you mentioned is actually the point, not a bug. Hashdex recently published research showing that more than 2,000 U.S. advisory firms now allocate to crypto ETFs, compared to fewer than 200 before 2024. These aren’t diehard crypto believers choosing between Coinbase and an ETF. They are traditional advisors who need custodial standards, insurance and regulatory compliance before they can invest their clients’ money.
The numbers also back this up. The data shows crypto ETPs pulled in $34.1 billion in 2025. That money wasn’t sitting on the sidelines because people didn’t know about Coinbase. It was there because institutional investors needed the infrastructure that ETFs provide.
As for the DeFi contradiction, I hear you. But I’d argue crypto ETFs and DeFi serve different purposes. ETFs aren’t trying to replace decentralized finance. They bridge the gap between traditional markets and digital assets. That bridge is what’s driving the institutional money that’s helping to legitimize the entire space.
Round 2: Hype or High Conviction
Hernandez: Increasing interest from institutional and retail investors is a good thing to see. It benefits the entire ETF market in terms of inflows. But is the increased interest due to strong conviction in digital assets or simply market hype? Between early 2024 and late 2025, the price of BTC went from below $45,000 at the start of 2024 and reached an apex of $126,000 just before Halloween in 2025. That said, the market, dressed as Michael Myers, slashed BTC prices by 30% come mid-November. And there were less Santa Claus rally believers in the crypto market due to the year-end slump. To this day, the crypto market is still reeling and looking to get back to that level. Of course, it certainly can — but will these new investors who were there for the climb still be there during the fall?
We’re already seeing cracks start to form. As The Block reported, SoSoValue (gotta love that name) noted accelerated outflows in bitcoin and ether ETFs as of late. It could be a simple market correction that will eventually work itself out. But will fickle investors in these funds have the diamond hands to continue holding on until the sea of red goes back to green?
What also has me bearish on the future of crypto ETFs is that it’s an ever-evolving space. First to market doesn’t guarantee success — ask Friendster before MySpace came along, and MySpace before Facebook came along, to confirm that notion. Bitcoin might be the toast of the crypto town today, but will it be supplanted by Ethereum tomorrow as the market favorite, and will Ethereum eventually be replaced by Solana due to greater efficiency? And then a developer could create a new layer 1 ecosystem that blows the doors off Ethereum and Solana. This means that ETF providers will be scrambling to produce crypto-based products to meet market demand and potentially shutter the doors on others due to waning interest. As much as I like the application of crypto ETFs, there’s still a lot of speculation.
I don’t think crypto ETFs will disappear faster than an internet meme centered around the numbers six and seven, but there’s still a lot of market maturation left to do. What do you think?
Shaw: Fair points on the volatility. That 30% drop from the October peak was brutal, and yeah, we have seen some money coming out recently. But I think you’re mixing up two separate issues here: crypto’s wild price swings and whether these ETFs actually have staying power.
Crypto has always been a roller coaster. That’s nothing new. What’s different now is all the infrastructure around it. ETFGI released a report showing crypto ETFs saw outflows of nearly $3 billion in November. That looks a little rough on the surface, but then you step back and realize they still brought in close to $48 billion though the first eleven months of the year. November was literally the first month money actually left after ten straight months of inflows. One month of people taking profits after a huge run doesn’t mean the whole thing is falling apart.
Here’s what’s different now: When bitcoin crashed in earlier cycles, retail investors on exchanges would panic sell. Now the big institutional investors are holding these products. This is in addition to actual regulatory oversight and financial advisors adding crypto to client portfolios. TD Securities found that alternative ETFs, including crypto, pulled in a record $54 billion last year, despite the volatility. That’s happening in a market where U.S. ETFs overall brought in $1.5 trillion. The system’s actually doing what it’s supposed to do.
Beyond just the price action, there’s some real building happening underneath. Hashdex is calling for some pretty big growth that has nothing to do with people just betting on prices going up. They think stablecoins could double, tokenized real-world assets could grow by ten times, and the whole AI-meets-crypto thing could hit $10 billion. Those aren’t day traders pumping coins — that’s serious institutional money figuring out how to actually use this technology.
On your point about which crypto ends up winning, you’re absolutely right that bitcoin might not stay at the top forever. Ethereum does different things, Solana’s way faster, and sure, something brand new could show up tomorrow. But that’s actually why I think the diversified approach makes more sense for the altcoin space. There are products like the CoinShares Altcoins ETF (DIME) that provide exposure to a basket of these alternative cryptos without forcing you to pick which one becomes the next big thing. You get a spread across Solana, Cardano, Avalanche and others, and the winners can sort themselves out over time.
I won’t say there is no speculation, I don’t think that would be true. But you can have speculation and real growth happening at the same time. The question isn’t whether crypto ETFs will survive the next crash (hint: they will). It’s whether all this infrastructure being built creates enough serious demand to make these things a permanent part of how people invest.
Final Round: What Happens Next?
Hernandez: Agreed that volatility is inherent in any market — digital or traditional. Speaking of traditional assets, the aforementioned TD Securities report slotted crypto ETFs as an “alternative” asset allocation. Under the Commodity Futures Trading Commission (CFTC), digital currencies are considered a commodity. While $54 billion in alternative assets is impressive, there’s also the $58 billion inflows the report mentioned regarding commodities. Will these commodities (gold, for example) take away market share and threaten the staying power of crypto ETFs? Will the shiny new object syndrome of crypto ETFs fade with investors falling back to traditional assets like gold that have less volatility?
Gold actually outpaced Bitcoin in 2025, potentially disproving the cryptocurrency’s status as “digital gold” in times of uncertainty. Bitcoin has no doubt been the stronger performer as of late, but gold has retail, institutional, and central bank demand to boot.
Alternative assets are supposed to provide investors with discorrelation to the broader market, but increasingly, bitcoin has been tracking the traditional equities market. In times of volatility, investors may prefer sticking to tried-and-true assets like gold via ETFs such as the Sprott Physical Gold Trust (PHYS) and the Sprott Gold Miners ETF (SGDM).
While yes, there is staying power for crypto ETFs for growth considerations, it could ultimately be concentrated in the largest ETF providers like the BlackRocks of the world. The aforementioned IBIT took in about $25 billion inflows last year, which accounts for almost 80% of the $31.8 billion in net inflows for U.S. spot crypto ETFs. It will be akin to Darwinian evolution theory in ETFs with the largest providers winning out in the survival of the fittest. Providers without the massive assets to weather the volatility could be shaken out. After all, investors often prefer the brand recognition of the largest providers who can also afford to offer lower fees and outprice competitors. This could prevent market entrants from introducing new, innovative funds like the Calamos Bitcoin Structured Alt Protection ETF (CBOJ). As such, other crypto ETFs could fall to the wayside and shrink the market. Interestingly enough, Bloomberg analyst James Seyffart echoed a similar sentiment on X, noting that we could see closures occur en masse by the end of 2026 and into 2027. Of course, this is all speculation.
You mentioned DIME. This is where I do see a lot of promise: ETF providers creating products that give you broad exposure to crypto as opposed to concentrated allocations to certain coins. In the future, we could see market-leading crypto funds that could serve as bellwethers — much like the SPDR S&P 500 ETF Trust (SPY) for stocks or the iShares Core U.S. Aggregate Bond ETF (AGG) for the U.S. bond market. We already see products like the Grayscale CoinDesk Crypto 5 ETF (GDLC) providing that level of diversified exposure. To your point, stablecoins and real-world asset (RWA) tokenization are promising areas of growth, which also spawned the Amplify Stablecoin Technology ETF (STBQ) and the Amplify Tokenization Technology ETF (TKNQ).
Shaw: You’re right about the concentration risk. BlackRock pulling in $25 billion out of $31.8 billion total for spot crypto ETFs is massive. I am sure we’ll probably see some of the smaller players shut down funds. But I’d argue that’s not the same thing as crypto ETFs losing staying power. That’s just the ETF market doing what it does. Look at any category after the initial rush, and it’s easy to spot the consolidation around the big names that offer lower fees. That doesn’t mean the category disappears.
On the gold comparison, I think you’re mixing up two different investment cases. Gold has been around for thousands of years as a store of value. I am not arguing crypto has that track record yet. But crypto offers expanded use cases that gold doesn’t, like cross border payment transactions that can happen in seconds. Gold is great for what it does, but crypto is building something different. The fact that both are pulling in serious money through ETFs says there is room for both.
Your point about bitcoin tracking equities lately is fair. I’d push back on writing off the whole idea based on recent correlation, though. These markets are still figuring out how they relate to each other. With big institutions moving money around, short-term correlations can spike, but that doesn’t mean the long-term case disappears.
The products you mentioned at the end of your response are exactly why I think this thing has legs. As more funds come out for stablecoin technology and tokenization, it shows that it’s not speculation on price movements anymore. That’s infrastructure. DIME, GDLC, STBQ, TNKQ… These are all ways for investors to get crypto exposure in the same accounts they hold everything else. To me, that signals that crypto is evolving into a real asset class with different strategies and use cases, not just a single bet on bitcoin going up.
Hernandez: Well DJ (I don’t recall a song for that), it’s been a lively discussion. Are crypto ETFs ultimately a fad or a long-term trend? I hope it’s the latter, but headwinds could also point to the former — in a utopian ETF world, I’d like both digital and traditional assets to exist together in perfect harmony. As mentioned earlier, I myself am a crypto enthusiast. Playing the bear was a trying task, but seeing both sides of the coin (pun intended) helps to formulate an informed investment decision. No doubt, it will be interesting to see how the crypto ETF marketplace shakes up for the rest of the year. Maybe we can revisit this topic again. Final thoughts?
Shaw: This was a good back and forth, Ben. I think 2026 is going to tell us a lot about whether the infrastructure growth keeps pace with the hype. If it does, crypto ETFs stick around. If it doesn’t, you might be right about the shakeout being worse than I expect. Let’s definitely check back on this later in the year and see where we land.
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