4.2 Index-based passive crypto investments may reach $500B in scale within five years.

As of the latest data, passive investments account for over 50% of asset management in the U.S., with total U.S. equity ETFs reach $8.3 trillion, and the largest ETF product exceeding $600 billion. Passive investment has become mainstream in the stock market.

As an emerging asset class, crypto assets are marked by a constant flow of new concepts, with over a million new tokens issued on-chain each month, posing a high learning barrier for investors. Additionally, the high price volatility of crypto assets and the significant drawdowns of individual tokens present considerable risks for investors. Index-based passive investment products, which track the market or specific sectors, offer the best option for professional investors focused on long-term trends to allocate crypto assets effectively.

With the growing scale of the crypto market and increasing demand for investment management, now is the ideal time to launch index-based passive investment products.

In recent years, the development of infrastructure-especially improvements in independent custody, multi-asset liquidity, and clearer regulatory frameworks-has created a solid foundation for launching such products. Historically, the first S&P 500 Index ETF, SPDR S&P 500 ETF Trust (SPY), was listed on the New York Stock Exchange on January 22, 1993, when the total U.S. stock market capitalization stood at $4.5 trillion at the end of 1992. Currently, the total market capitalization of the crypto market is approaching $4 trillion, making this the right moment for the introduction of index-based passive investment products.

Referring to the $80 trillion U.S. stock market, equity ETFs account for $8.3 trillion, approximately 10% of the total market capitalization. Crypto market passive investment products are expected to grow even faster, potentially reaching over 5% of the crypto market capitalization within the next five years, with a projected scale of $500 billion.

Passive is >50% of US domiciled AUM

Index-based passive investments have tremendous potential and will experience rapid growth in the next five years.