Bitwise Forecasts 100+ Crypto ETFs in 2026; Analysts Warn of Custody ‘Fragility’
Bitwise predicts a flood of 100 new crypto ETFs following SEC rule changes, but analysts warn centralized custody risks could trigger mass liquidations by 2027.
The SEC’s September 17 decision to approve generic listing standards has effectively removed the regulator’s ability to throttle new crypto products. The result? Bitwise Asset Management now predicts over 100 new crypto-linked ETFs will launch in the U.S. by 2026.
But the flood of “plain vanilla” funds masks a systemic risk. While issuers prepare for an “ETF-palooza,” analysts and regulators are flagging a critical infrastructure bottleneck: custody concentration.
The Single Point of Failure
The market’s plumbing hasn’t scaled with its ambition. Custody remains perilously centralized, with Coinbase Custody reportedly securing up to 85% of global Bitcoin ETF assets. The new generic standards allow smaller, niche products (e.g., themed altcoin baskets) to skip the rigorous 19b-4 review process, provided they meet basic volume or surveillance checks.
This creates a scenario where 100+ new products rely on the same settlement layer. SEC Commissioner Caroline Crenshaw warned this specific setup creates “correlated fragilities” that regulators only identify post-crisis. If the primary custodian halts withdrawals or suffers an outage during high volatility, the liquidity shock would transmit instantly across dozens of supposedly unrelated funds.
The Liquidation Event
Quantity does not imply longevity. Bloomberg Intelligence analyst James Seyffart validated the 100-ETF target but offered a grim caveat regarding their survival rate.
“We’re going to see a wave of crypto ETP liquidations… likely by the end of 2027. Issuers are throwing A LOT of product at the wall.”
The mechanics of these potential failures are already visible. Niche tokens often lack deep borrow markets. When demand for an ETF spikes, Authorized Participants (APs) must source the underlying coins to create shares. If borrow dries up, common in small-cap crypto, premiums skyrocket, and the ETF breaks its peg. Seyffart notes that while the launch cycle will peak in 2026, the “culling” of zombie funds will likely define 2027.
Institutional Signal
Bitwise’s outlook isn’t just about product count; it’s about supply shock. The firm estimates ETFs will absorb more than 100% of newly issued Bitcoin, Ethereum, and Solana in 2026. The capital is there. The question is whether the infrastructure can handle the weight without buckling.
