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Bernstein: Crypto Fund Management Market Poised for $50B Revenue Surge

In a recent research report, broker firm Bernstein has made an intriguing prediction that the crypto fund management business could potentially become a $50 billion industry in terms of revenue.

The US Bitcoin ETF Game-Changer

Bernstein’s bold forecast is rooted in the anticipated launch of spot-based Bitcoin (BTC) Exchange-Traded Funds (ETFs) in the United States, which is expected to attract substantial capital to the crypto market.

As of the time of writing, the entire crypto market boasts a total capitalization of $1.08 trillion, making the potential growth to $50 billion in revenue a significant milestone. The anticipation surrounding spot ETFs in the crypto space has been growing steadily, with major players like BlackRock Inc (NYSE: BLK) filing for Bitcoin ETF approval with the US Securities and Exchange Commission (SEC).

However, the SEC recently delayed its decision on all spot ETF applications until October, heightening both speculation and hope within the crypto market. The potential approval of these ETFs is viewed as a key catalyst that could open the floodgates to mainstream capital.

Bernstein, in its research, has pointed out that demand for crypto investments is likely to be driven by various sources, including investment advisors, wealth and private banking integrated products, and the easier accessibility of ETFs through direct broker accounts. These three factors are expected to significantly boost the appeal of crypto assets among traditional investors.

Meanwhile, the crypto industry has come a long way since its inception. From its early days as a niche market, it has evolved into a significant player in the financial landscape.

According to analysts led by Gautam Chhugani, the industry is expected to transition from a “cottage industry” with $50 billion of managed assets to a “formal, regulated asset management industry with $500-650 billion of assets over the next five years”. This transformation is indicative of the growing institutional interest and the maturation of the crypto market.

ETF Market Share and Crypto Hedge Funds

The research also provides insights into the expected market share of ETFs and crypto hedge funds within the crypto ecosystem. It suggests that ETFs could capture a substantial 10% share of the market capitalization for BTC and Ethereum (ETH).

Meanwhile, crypto hedge funds are expected to secure a 5-6% market share. These statistics underline the growing appetite for more diversified and regulated investment options in the crypto space.

The report also acknowledges that crypto adoption often follows hype cycles, with periods of rapid growth punctuating the journey. According to Bernstein, the year 2024 is anticipated to be a landmark regulatory year, particularly in terms of ETF approval.

This prediction aligns with the notion that regulatory clarity will be a significant driver of institutional investment. As regulatory frameworks become more defined and investor protections are enhanced, a hockey stick-like adoption curve is expected to take shape.

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Bernstein: Crypto Fund Management Market Poised for $50B Revenue Surge