Crypto ETFs: A More Selective Market Emerges

Key Takeaways:

• Bitcoin remains dominant, but that ETF demand has become more selective toward the lowest-cost products.
• Hyperliquid ETFs show that investors still reward differentiated use cases, flexibility, and credible growth narratives.
• Active multi-token ETFs can provide a nimble solution to combat the dynamic nature of the crypto market.

The crypto market has entered a more selective phase. Financial institutions continue to explore practical concepts like tokenization, stablecoins, and incorporating crypto trading alongside equities on their platforms.  This momentum persists even as broader enthusiasm for cryptocurrencies has cooled. And in the background, regulatory progress continues to evolve as the CLARITY Act nears the finish line, providing tailwinds for the long term.

Bitcoin remains the market’s core institutional asset, but weaker prices and ETF flows suggest that demand is harder to earn. Outside of Bitcoin, investors have become more selective, favoring altcoins like Hyperliquid with clearer use cases, stronger fundamentals, or near-term catalysts. This note examines recent performance, flows, and launches in the second quarter of 2026.

Bitcoin Demand Remains Persistent

Recently, Bitcoin prices have stagnated in the $60,000-$70,000 range. Prices are down over 25% year to date (as of July 20, 2026), but unlike earlier periods of weakness, spot Bitcoin ETFs flows have been less resilient. This time even the largest Bitcoin ETF — the iShares Bitcoin Trust ETF (IBIT) — which has previously held onto stronger demand, has shifted to net outflows on a year-to-date basis. But relative to the spot Bitcoin ETF group, IBIT still maintains a hold of around 60% market share, although several competitors have stood out recently.

The Morgan Stanley Bitcoin Trust (MSBT), launched in April 2026, has gained over $400M in net inflows through Morgan Stanley’s vast wealth management network despite being a latecomer to the group. Also, the Grayscale Bitcoin Mini Trust (BTC) has stood out with the most net inflows (over $600M YTD). Its 0.15% expense ratio — the lowest of the group and 10 basis points below IBIT’s — has likely helped support demand.

Ethereum ETFs Bleed Heavier Than Bitcoin ETFs

The underlying asset for Ethereum ETFs, Ether, has been down 36% year to date, relative to near 25% for Bitcoin. Ether is generally viewed as a higher-beta, more tech-like crypto asset. Consequently, its outflows have been even more extreme in a risk-off environment.

The Grayscale Ethereum Staking Mini Trust (ETH) and the iShares Staked Ethereum Trust (ETHB) are the only products with significant year-to-date inflows. Like Grayscale’s BTC, ETH charges 15 bps, which helps explain why fee-sensitive retail investors may be more willing to stick with Grayscale’s low-cost option. ETHB, newly launched in March 2026 is currently 12 bps under a fee waiver, which makes it the cheapest of the group. After its fee waiver ends, ETHB will cost 25 bps.

Altcoin Innovation Continues Despite Weakened Demand

Outside of Ether, altcoins have attracted greater attention following the wave of crypto ETF launches enabled by the SEC’s rule changes. Investor demand, however, has remained highly uneven and concentrated in the largest assets. XRP and Solana ETFs each hold roughly $1 billion in assets, while single-asset products tied to Dogecoin, Chainlink, and Sui generally remain near or below $100 million.

Many of these funds are only a few months old and launched into a difficult environment for crypto and other higher-beta, speculative assets. Even so, the group has generated modest net inflows. This suggests that early investors have largely maintained their positions despite broader market weakness.

Investors Reward Hyperliquid’s Real-World Utility

Hyperliquid has been a notable exception to the broader weakness across crypto markets. Interest in HYPE has been supported by the growth of Hyperliquid’s decentralized trading platform, which generates meaningful revenue and gives the token a clearer use case than many other altcoins. That momentum has extended to the ETF market, where the Bitwise Hyperliquid ETF (BHYP), the 21Shares Hyperliquid ETF (THYP), and Grayscale Hyperliquid Staking ETF (HYPG) attracted strong early demand despite launching into a difficult environment. Their success suggests investors are still willing to move beyond Bitcoin when an asset is tied to real trading activity, a differentiated platform, and a compelling growth narrative. My recent note discusses Hyperliquid and Hyperliquid ETFs in more detail.

Several Multi-token ETFs Take an Active Approach

Over the past quarter, notable launches outside of the single asset category included a growing number of actively managed, multi-token ETFs. While passive multi-token ETFs have struggled to gain broad traction, active management may offer greater flexibility in a volatile cryptocurrency market that trades 24/7. The CoinShares AltCoins ETF (DIME) was launched in 4Q25 to provide an active view altcoins outside of Bitcoin, Ethereum, and stablecoins. In April and May, respectively, the GSR Crypto Core3 ETF (BESO) and the 21Shares Active Crypto ETF (TKNS) were also launched to provide an active, basket view. All three of these funds access crypto tokens by holding other ETPs. The newest of the group, the T. Rowe Price Active Crypto ETF (TKNZ) by comparison, is the first multi-token spot ETF with direct exposure to multiple tokens. At 75 basis points, TKNZ is cheaper than the previously mentioned funds which have expense ratios near 100 basis points or higher. My VettaFi colleague, Nick Peters-Golden, covered the TKNZ launch in more detail last week.

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