Crypto ETP Closures Expected Amid Market Competition

TLDR

• Over 126 crypto ETP filings may not survive market competition.
• U.S. spot Bitcoin ETFs hold $112.5 billion in net assets.
• Consolidation of crypto ETPs expected by late 2026.

James Seyffart, Senior ETF Analyst at Bloomberg Intelligence, has issued a warning about potential closures of crypto exchange-traded products (ETPs). Seyffart mentioned that over 126 crypto ETP filings are currently in play, and many of these products may not survive the increasing market competition. Consolidation might start by late 2026, with a significant number of liquidations expected by the end of 2027.

Seyffart, who tracks the cryptocurrency-linked products’ market dynamics, points to the competition for limited investor capital as a key driver for these potential ETP shutdowns. With an excess of filings, issuers may struggle to sustain their offerings in a crowded market.

SEC Changes Impacting Crypto ETFs

The U.S. government’s recent shutdown allowed for the launch of altcoin ETFs via Section 8(a), facilitating products like XRP by issuers such as Canary Capital. The Securities and Exchange Commission (SEC) introduced new generic listing standards in September 2025, which eliminated the need for individual 19(b) filings. This change is expected to accelerate filings, although it may increase the risk of later repeals.

For context, a past SEC rule change made commodity-based trust shares more accessible by simplifying the listing process. Such regulatory dynamics mirror current overcrowding risks, which could lead to post-launch liquidations for products with low assets under management (AUM).

Tracking the Affected Cryptocurrencies

The U.S. spot Bitcoin ETFs hold about $112.5 billion in net assets, equating to 6.6% of the Bitcoin market value. Recently, there was a $391 million inflow towards Fidelity’s FBTC. Ethereum, on the other hand, experienced outflows of $22.43 million, while Solana and XRP experienced inflows of $10.99 million and $18.99 million, respectively.

Tokens and coins such as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and XRP are primarily affected, with lower flow altcoin ETPs also at risk. Products tracking these assets face challenges due to low cash flows and an increasingly crowded market.

Analyst Insights and Market Predictions

While Seyffart’s prediction has garnered attention, no direct statements from founders or executives of affected issuers, like Bitwise, Grayscale, and others, have surfaced. However, Bitwise posted about launching over 100 crypto ETFs in 2026, prompting Seyffart’s response about the market’s saturation.

Seyffart replied on X, emphasizing that many of these products may not endure due to market crowding. He projected that visible consolidation could emerge late 2026, with more liquidations occurring by 2027.