Bloomberg Forecasts Up to $40B Crypto ETF Inflows by 2026, Signalling Institutional Shift
Bloomberg Intelligence senior ETF analyst Eric Balchunas projects cryptocurrency ETF inflows of roughly $15 billion in a base case and up to $40 billion by 2026 under favorable conditions. The forecast is driven by demand for regulated Bitcoin and Ethereum exposure, expanding ETF product suites, and gradual onboarding of large institutional allocators such as pension funds, sovereign wealth funds, RIAs and endowments. Key macro catalysts include anticipated Federal Reserve interest-rate cuts that would lower opportunity cost for non-yielding assets and weaken the US dollar, alongside a clearer regulatory framework and approval of additional products (e.g., spot Ethereum ETFs). Historical ETF flow behavior during a ~35% Bitcoin correction—only ~4% outflows of ETF AUM and occasional net inflows—suggests ETF investors behave as patient allocation-focused holders, providing price support and dampening volatility. Reaching the $40 billion scenario likely requires multiple rate cuts, product expansion, and public allocation endorsements from major pensions or similar institutions. The outlook signals a potential structural shift toward institutional adoption of crypto via regulated ETFs, with a base-case $15B inflow and an upside path to $40B if macro and regulatory conditions align.
Bullish
The forecast is bullish because it projects sizable, sustained capital inflows into regulated crypto ETFs driven by macro policy and institutional allocation—factors that historically support price appreciation and reduce volatility. Expected Fed rate cuts lower opportunity costs of holding non-yielding assets like BTC and ETH, making ETFs a more attractive allocation vehicle for risk-conscious institutions (pension funds, sovereign wealth funds, RIAs). The article also highlights that ETF flows exhibited resilience during a ~35% BTC correction (only ~4% AUM outflows and some weeks of net inflows), indicating these products attract patient, allocation-focused investors who can provide price support. If spot Ethereum ETFs are approved and major pension funds publicly allocate even small percentages, the supply of demand from large balance sheets could meaningfully boost inflows—potentially the $40B upside. Short-term impact: likely positive sentiment and reduced downside tail-risk for BTC/ETH as ETF demand acts as a liquidity buffer; increased trading in ETF shares and derivatives may raise correlation between spot prices and ETF flows. Long-term impact: greater institutional adoption would deepen liquidity, compress volatility, and support higher baseline valuations as crypto becomes a recognized portfolio allocation. Caveats: the bullish case depends on macro (multiple rate cuts), regulatory clarity, and product approvals; failure of these conditions or a macro shock could delay or reverse flows, generating neutral or bearish outcomes as seen in past cycles when regulatory or macro headwinds curtailed institutional entry.