Crypto ETPs Will See Inflow of Liquidations in 2026, Warns Bloomberg Analyst — Is a Major Crash Ahead?

Core Insights - A significant wave of closures and liquidations in crypto exchange-traded products (ETPs) is anticipated as early as 2026 due to an influx of new crypto-linked funds amid deteriorating market conditions [1][7] - Analysts indicate that technical indicators are signaling renewed downside risks for the broader cryptocurrency market [1][8] Group 1: Market Dynamics - James Seyffart from Bloomberg Intelligence predicts substantial liquidations among crypto ETPs in the next two years as competition intensifies, leading weaker products to struggle for viability [2][7] - Seyffart emphasizes that issuers are launching products at an unsustainable rate, with at least 126 crypto-related ETF filings currently in the pipeline [2][7] Group 2: Future Projections - Seyffart suggests that the number of new launches could sharply decline if market conditions worsen, estimating that around 100 launches would be feasible unless there is a 50% market drop [4] - Bitwise Asset Management forecasts that over 100 crypto-linked ETFs will launch in the U.S. by 2026, driven by upcoming regulatory changes from the SEC [5][7] Group 3: Historical Context - Historical data indicates that rapid expansion in the ETF market often precedes consolidation, with 622 ETFs closed globally in 2024, including 196 in the U.S. [5] - An additional 179 ETF closures were recorded in the first four months of 2025, highlighting ongoing challenges in the market [6]