Encryption ETF enters a new stage: index funds become the new protagonists, with over 100 new ETFs expected to be launched in 2026.

In 2025, digital asset investment is ushering in a structural turning point, with industry focus shifting from “betting on a single Token” to “strategizing across the overall track.” Multiple asset management institutions expect that by 2026, there will be more than 100 new crypto ETFs and ETPs, with core competition concentrating on broad market index funds rather than single asset products like Bitcoin, Ethereum, or Solana.

Despite Bitcoin recently pulling back below $90,000, institutional allocation demand remains strong, gradually exhibiting characteristics of long-term, index-based, and low-selection-preference investment. On the policy front, the innovation-friendly approach adopted by the new U.S. government may also accelerate the approval process for ETF products, pushing the encryption market into the indexed era.

Index-based Cryptocurrency ETF Becomes the Focus of the Next Round of Competition

Recently, several asset management institutions have expressed the same viewpoint on different occasions: the next wave of crypto investment will not be triggered by a specific public chain, but will be initiated by the “era of index funds.” Bitwise Chief Investment Officer Matt Hougan pointed out that the real competition in the market is not about who can launch more popular Solana or Ethereum products, but who can be the first to seize the huge track of “broad market index ETF.”

This judgment stems from changes in institutional investment behavior. As more traditional institutions enter the encryption market, they exhibit preferences that are completely different from retail investors: they are unwilling to bet on a specific chain, a specific track, or a specific narrative, but rather hope to obtain the overall performance of the industry through low decision-making costs. Institutions do not want to pick who will win, but rather want to buy the entire industry at once.

Hougan likens this stage to the “turning point from stock picking to buying the S&P 500.” The rise of index funds in traditional markets has changed the way capital is allocated, and the crypto industry is heading down a similar path. With the acceleration of risk tolerance constraints, internal compliance requirements, and adjustments to asset portfolio structures, institutions are more inclined to hold a “multi-chain basket” and allocate long-term.

In his view, these types of index products will not only become the core of the ETF craze but will also become the default option for institutions to accumulate digital assets.

Encryption index products are expected to experience explosive growth.

Bitwise estimates that encryption ETFs will see large-scale expansion in the next two years, with index products becoming the key growth direction for the entire ecosystem. In an interview with CNBC, Hougan made an almost “industry-level prediction”: by 2026, there could be over 100 new ETFs and ETPs, which will drive digital assets to gradually align with the index system of traditional financial markets.

The trend of indexing has further marginalized the role of “single-asset products.” Over the past year, Bitcoin and Ethereum ETFs have brought a large amount of capital to the market, but more institutions are seeking composite tools that can be held long-term and diversify risk.

In addition, fund issuers are rethinking their future layout strategies. For example:

• Various “Full Market Basket Indices”
• Sub-indexes classified by application direction (e.g., smart contract platform index, stablecoin ecosystem index, etc.)
• Index-based portfolio including Staking收益
• A comprehensive basket covering Layer-1, Layer-2, and infrastructure

This means that the ETF will shift from a “single-track betting tool” to a “standardized investment entry for digital assets.”

Core data points of the encryption index fund expansion

• Bitwise expects that the number of encryption ETFs/ETPs launched before 2026 will exceed 100.
• Index funds are seen as the next generation mainstream product alternative to single asset ETFs.
• Institutional allocation demand is strong, leaning towards “full market exposure” rather than a single chain bet.
• New government regulations may accelerate and shorten approval times by 30%-40%.
• Existing crypto ETFs have continued to see net inflows during the pullback period, indicating an increase in fund stickiness.

This wave of indexation trends is expected to reshape the landscape of the cryptocurrency asset management industry, moving digital assets from “high volatility, high narrative type investments” to an asset class that is “composable, predictable, and sustainably allocatable.”

Market volatility does not hinder institutional demand; product development is instead accelerating.

Even though Bitcoin recently fell below 90,000 USD, causing panic among some retail investors, the inflow of institutional investors has not significantly slowed down. Bitwise pointed out that institutions continuing to increase their positions during the pullback period reflects the increasing maturity of the asset class: funds are no longer swayed by short-term emotions, but rather tend to favor long-term allocation and ignore short-term fluctuations.

This phenomenon also explains why products, including staking-related ETFs, continue to grow. For example, Bitwise's Solana Staking ETF earns returns by staking SOL and maintains fund stability even during price downturns. Although the ETF is still below its issuance price, it recorded a 9% increase this Tuesday, showing that exposure related to staking remains favored in the market.

The core advantages of this type of product include:

• Provide institutions with a combination structure of “passive income + indexed exposure”
• Reduced the compliance, custody, and operational costs of configuring staking assets.
• Allow funds to still earn compound interest during periods of volatility.
• Allows institutions to avoid actively selecting “which chain is stronger”

From the perspective of traditional finance, staking ETF is, to some extent, taking on a dual role of “bond interest + equity growth,” making it likely to become a complementary category for institutional fixed income allocation.

Policy Direction Changes ETF Development Speed, 2026 May Become a Year of Explosion

At the policy level, the new government's friendly attitude towards encryption has accelerated market expectations. Tom Lee from Fundstrat pointed out that an innovation-oriented policy direction could make ETF approvals more efficient, allowing product lines that would normally take years to advance to be quickly implemented within 1–2 years.

Under a more clearly defined regulatory framework, ETF issuers are proactively preparing legal structures, index methodologies, and custody partners. The acceleration of product lines will not only enhance competition in the capital markets but also facilitate the quicker entry of large institutions into the market, creating a positive feedback loop.

From the perspective of industry development logic, this will bring triple impacts:

• Improved regulatory clarity → Faster product approval speed
• Product approval accelerated → Issuer competition increased
• Competition enhancement → Investors benefit from more diverse choices and lower management fees

More importantly, the improvement of regulation enables the asset management industry to launch more indexed products covering staking, cross-chain ecosystems, application tracks, and stablecoin systems, providing institutions with a more complete market exposure.

The Significance of the Era of Encryption Indexing: From Niche Assets to Mainstream Allocation

Matt Hougan's core point is very straightforward: for digital assets to become a multi-trillion-dollar asset class, they cannot continue to rely on the preferences of chain communities and single Token enthusiasts; they need to become assets that can be “indexed like stocks.”

Index funds bring three key changes to the industry:

Reduce decision-making costs

Institutions don't have to choose “Ethereum vs Solana,” they just need to “buy the entire industry.”

Enhance Risk Diversification

The market has shifted from the cyclic fluctuations of highly centralized chains to being driven by the overall performance of the industry.

The capital structure is gradually stabilizing

The increase in the proportion of long-term funds makes the industry's performance closer to traditional asset classes.

From the perspective of encryption becoming a “mainstream asset”, this may be the most critical step: when investors can buy the “entire industry” rather than select individual projects, the scale of inflow will far exceed the amount of funds any single token narrative can bring.

FAQ

Why will index-based encryption ETFs become mainstream?

Because institutions are unwilling to bear the risks of selecting chain ecosystems, they hope to gain long-term exposure by making a one-time purchase of the entire industry, thereby reducing decision-making costs and improving the level of risk diversification.

Is the prediction of launching 100 ETFs before 2026 realistic?

Multiple institutions believe it is very realistic, as the regulatory environment is improving, the demand for the encryption asset category is strong, and issuers are also accelerating the layout of new index strategies.

Will the recent Bitcoin pullback affect ETF demand?

According to Bitwise's data, institutions continued to net buy during the pullback, indicating that the market is gradually breaking free from short-term emotion-driven factors, and the stability of ETF funds has significantly increased.

Why is Staking ETF popular among institutions?

Because this type of product combines staking yield with indexed exposure, providing “passive income + compound growth” while significantly lowering institutional operational costs.

How do policy changes affect the pace of ETF advancement?

More friendly policies will shorten the approval process, allowing ETF products to be launched more quickly, while attracting more issuers and institutions to join the competition, accelerating the maturity of the industry.