As an experienced analyst, I firmly believe that the global Exchange-Traded Fund (ETF) market will experience substantial growth in the coming decade. Based on Eric Balchunas’ prediction, assets in the ETF industry are projected to reach an impressive $35 trillion by 2035. This growth can be attributed to several factors such as low costs, flexibility, tax efficiency, and the appeal of newly launched crypto ETFs.
The ETF market on a global scale is predicted to experience significant expansion during the upcoming ten years.
According to Eric Balchunas, Senior ETF Analyst at Binance, the value of assets in global Exchange-Traded Funds (ETFs) is forecasted to more than triple, growing from their current $13 trillion to an estimated $35 trillion by the year 2035.
“ETFs’ advantages such as low costs, intraday liquidity, tax efficiency, and flexibility will persistently draw investors’ funds and trading volume. Consequently, we can anticipate the introduction of more novel products, creative designs, and an increased workforce in this sector.”
As a cautious crypto investor, I’d like to share my perspective on this forecast. It’s important to note that the assumptions behind this projection are more subdued than what we’ve witnessed in the last twenty years. Specifically, this forecast is grounded in a moderate 10% compound annual growth rate (CAGR), which is significantly less than the 17% and 25% rates we experienced in the past couple of decades.
Despite market returns falling short of past records, the allure of Exchange-Traded Funds (ETFs) persists, bolstered by the introduction of various cryptocurrency ETFs. These new offerings expand the benefits and versatility of ETFs within the investment landscape.
An Exchange-Traded Fund (ETF) focused on cryptocurrencies is designed to mirror the price of a specific digital currency by investing its assets into that particular crypto. These funds are accessible through public exchanges and function similarly to other ETFs, allowing investors to hold them in their regular brokerage accounts for easy investment in crypto assets.
Market expansion
The projected advantages are poised to draw substantial investment dollars and trading action, encompassing both conventional and cryptocurrency ETFs. With market growth, heightened competition among ETFs is anticipated to spur the creation of innovative ideas.
As a market analyst, I would add that the expansion of our market may encompass cryptocurrencies and asset tokenization. With the increasing approval of crypto Exchange-Traded Funds (ETFs), it’s plausible to anticipate more cryptocurrencies, such as Solana, being considered for ETF inclusion.
As an analyst, I respectfully disagree with the prediction regarding tokenized ETFs. The implementation of such financial instruments faces significant challenges, including regulatory hurdles that are particularly formidable. Moreover, current users of exchange-traded funds (ETFs) enjoy a seamless experience, making it harder to make a compelling case for change. Nonetheless, I will keep a close eye on the developments in this space.
— Eric Balchunas (@EricBalchunas) June 14, 2024
Asset tokenization is a rising trend, yet it’s unlikely to bring significant upheaval to the ETF sector immediately. The reason being, challenges such as interoperability related to this technology are still under development. Consequently, both the technology and its influence on the financial industry are yet to become widespread norms among institutions.
By the year 2035, which is over a decade from now, institutions may supplement Exchange-Traded Funds (ETFs) to expand their capabilities and potentially boost the total global growth of these financial instruments to an impressive $35 trillion.
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2024-06-14 18:58