Potential Liquidations of Crypto ETPs by 2027: Insights from an Analyst

Analyst James Seyffart predicts that a significant number of crypto exchange-traded products (ETPs) will enter the market in 2026. However, many of these ETPs may face liquidation by the end of 2027 due to inadequate demand.

Key Takeaways

Over 100 crypto ETPs are expected to launch in 2026, but many may quickly close due to low interest.
Seyffart anticipates a rise in liquidations among these products by late 2026 or early 2027.
A significant number of current ETP applications are pending approval from the US Securities and Exchange Commission (SEC).
Most ETPs shut down because they do not attract enough investment.
New SEC listing standards could lead to a surge in approved crypto ETPs in 2026.

Crypto ETPs could see a flood of liquidations by 2027: Analyst

Main Content

According to Bloomberg analyst James Seyffart, the crypto market is on the brink of a substantial increase in exchange-traded products (ETPs) by the year 2026. He agrees with estimates from the crypto asset management firm Bitwise, which predicts that more than 100 crypto ETFs will debut. However, he cautions that many of these products are unlikely to remain operational for long due to insufficient demand.

Seyffart mentioned, “We’re going to see a lot of liquidations in crypto ETP products. This might occur at the tail end of 2026, but is likely by the end of 2027.” He pointed out that there are currently more than 126 ETP applications waiting for feedback from the US Securities and Exchange Commission (SEC).

He further explained that “Issuers are throwing A LOT of product at the wall,” suggesting that many new offerings may be untested and ultimately unsuccessful in gaining traction.

A report from The Daily Upside highlighted that last year saw the closure of 622 ETFs globally, with over 189 of these in the US. In fact, Morningstar indicated that the 244 ETFs that shut down in the US in 2023 had an average lifespan of just 5.4 years.

_Source:_James Seyffart

Many investment products fail primarily because they cannot draw sufficient inflows, leading to low assets under management. Already this year, several crypto ETPs have been liquidated, with the most notable being the ARK 21Shares Active Bitcoin Ethereum Strategy ETF (ARKY) and the ARK 21Shares Active On-Chain Bitcoin Strategy ETF (ARKC).

SEC’s Evolving Listing Standards May Boost Approvals

Looking ahead, industry experts anticipate that the SEC's new generic listing standards—effective since September—will lead to a rapid increase in approvals for crypto ETPs. These new rules eliminate the need for a case-by-case evaluation of each application.

Even before these new standards were implemented, asset managers were already filing for ETFs linked to more speculative tokens, including Melania Trump’s memecoin. This year, several ETFs tracking other cryptocurrencies like Litecoin, Solana, and XRP have been launched successfully, further diversifying the market beyond the Bitcoin and Ether ETFs introduced in 2024.

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Since their launch in January 2024, spot Bitcoin ETFs in the US have attracted inflows totaling $57.6 billion, while spot Ether ETFs have amassed $12.6 billion since their introduction in July 2024, according to data from Farside Investors. Notably, recent spot Solana ETFs from various firms like Bitwise, VanEck, Fidelity, 21Shares, Franklin Templeton, and Grayscale have accumulated $725 million since late October.

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