Crypto index ETFs see slow start compared to Bitcoin ETFs

New cryptocurrency index ETFs, designed to provide diversified exposure to the crypto market, have seen a slower start compared to the strong demand for spot Bitcoin (CRYPTO:BTC) ETFs.

The Franklin Crypto Index ETF (EZPZ) has accumulated about $2.5 million in net assets since its launch on February 20, while the Hashdex Nasdaq Crypto Index US ETF (NCIQ) has gathered just over $1 million since its debut on February 14.

In contrast, the Franklin Bitcoin ETF (EZBC) saw approximately $50 million in net inflows on its first day, and the Bitwise Bitcoin ETF (BITB) attracted nearly $240 million.

Similarly, single-asset spot Ether (CRYPTO:ETH) ETFs experienced stronger initial demand, with about $100 million in net inflows on their first day of trading.

A key reason for the slower uptake of crypto index ETFs is their limited diversification.

Due to regulatory constraints, these funds primarily hold Bitcoin and Ether, reducing their appeal to investors seeking broader exposure to the crypto market.

EZPZ and NCIQ track indexes based on market capitalisation, resulting in Bitcoin-dominated portfolios.

As of February 21, Bitcoin had a market capitalisation of roughly $1.9 trillion.

Both ETFs intend to expand their holdings to include more crypto assets once regulatory approvals allow.

The SEC is currently reviewing applications for ETFs that include altcoins such as Solana (CRYPTO:SOL) and XRP (CRYPTO:XRP).

Analysts expect more diversified crypto ETFs could gain approval in 2025, offering investors additional options for crypto exposure.

The launch of NCIQ builds on Hashdex’s experience in crypto index-based products.

Hashdex manages the largest multi-asset crypto exchange-traded product (ETP) in Europe.

NCIQ tracks the Nasdaq Crypto US™ Index (NCIUS), developed by Nasdaq Global Indexes and Hashdex, and has a management fee set at 0.25% annually through the end of 2025, increasing to 0.50% afterward.

The future success of crypto index ETFs will depend on regulatory developments.

The approval of spot Bitcoin ETFs marked a major milestone, and potential approval of ETFs holding altcoins would represent another step forward in expanding investment opportunities in the crypto market.

At the time of reporting, the Bitcoin (BTC) price was $96,035.49.