Crypto ETFs Surge as Weakening Dollar Triggers Short Squeeze

The crypto ETF market has seen significant growth in recent weeks, driven by a combination of factors. One key catalyst was the announcement by Treasury Secretary Scott Bessent to double long-end bond buybacks to at least $4 billion per operation, which weakened the dollar and triggered a short squeeze.

As a result, Bitcoin hit $80,000, while Ethereum and Solana gained more than 30% and Hyperliquid surged nearly 50%. On the flow side, spot Bitcoin ETFs pulled in $2 billion in net inflows last week, but year-to-date flows remain down $2.5 billion.

Roxanna Islam, head of sector and industry research at VettaFi, noted that flows have settled into a barbell pattern, with established funds like the iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC) on one end, while lower-cost newcomers like the Morgan Stanley Bitcoin ETF (MSBT) attract the other.

The market is also becoming more selective, with REX Osprey recently closing its staked ether and bitcoin ETFs, and Grayscale withdrawing filings for Cardano, Polkadot, and Hedera ETFs. Islam attributed this to demand concentration rather than lost investor interest, pointing out that Solana spot ETFs have gathered over $400 million year-to-date.

SEI's ETF lineup has also seen remarkable growth, more than tripling in assets over the past 12 months. Robert Hum, head of investment product and commercialization at SEI, attributed this to single-factor funds hitting three-year track records, model portfolio integration, and advisor network demand.