Rumors about an exchange-traded fund (ETF), which tracks the top NFTs, have been circulating since Luca Netz of Pudgy Penguins made a social media post. ETF issuers, market analysts and other experts have told Decrypt it's unlikely that such a fund is imminent because traditional investors still believe NFTs are mostly “nonsense.”
NFT fans began questioning if a U.S. cryptocurrency reserve was possible after President Donald Trump’s announcement. Netz replied by retweeting it and adding that this is something he’s been working. “something for our JPEGs”—fueling speculation that an NFT ETF was on the way.
The experts that spoke at Decrypt The idea was thrown out the window.
“A NFT ETF would face significant technical and structural challenges, primarily due to the illiquidity of NFTs, ” James Butterfill, the head of research at CoinShares. He said that illiquidity is a major problem. “makes price discovery and market-making nearly impossible—similar to why real estate ETFs are rare.”
Great American JPEG Reserve is more likely an ETF than a reserve, although it sounds great.
— TylerD 🧙♂️ (@Tyler_Did_It) March 2, 2025
Ryan Rasmussen is the head of Research at ETF provider Bitwise Asset Management. He explained that due to technical issues, funds may have difficulty constructing pricing methodologies as NFTs do not all come with an equal price. He pointed to Bitwise's NFT index as an example of this in action.
A similar problem is that the lack of liquidity in the assets makes it impossible for the issuer to enter and exit a trade without having an impact on the market. Rasmussen is of the opinion that this type of trading will be a risky proposition. “possible” The technical challenges are still there.
ETFs were created in order to increase liquidity within a certain market or class of assets. According to CoinGlass spot U.S. Bitcoin exchange-traded funds (ETFs) currently manage $103.8 billion in assets and daily have been seeing billions of dollars of trading volume since October. Rasmussen says that much of the volume that is generated by spot U.S. Bitcoin ETFs comes from investors, who wouldn’t have otherwise invested in cryptocurrency.
“From my experience, the conversations we're having are still stuck in the post 2021 NFT bust headlines,” He explained. “The idea that traditional investors are looking to get exposure to NFTs as an ETF, to me, is not that believable.”
Chris Akhavam, Chief Business Officer at NFT marketplace Magic Eden, argued that the chances of a NFT ETF will pick up amid the sector's next major growth run. He said that there is not enough liquidity in the market to meet the increased demand from an ETF.
“I think the likelihood of a NFT ETF passing this year is very low, or just unlikely to happen at all.” Rasmussen told DecryptAddition to that “I just think that most investors today believe that NFTs are nonsense. It's not a view that I hold, but I do hear it.”
HashKey, a Hong Kong ETF supplier, echoed the sentiment. Decrypt The following are some examples of how to use “NFT ETFs are likely a longer-term prospect rather than an immediate reality,” As the market has not yet matured.
But that doesn’t mean they can’t dream.
A NFT ETF would provide legitimacy as well as possible growth to an asset class that has been beaten down from its 2021 highs—much like Bitcoin and Ethereum before their ETF approvals.
“An NFT ETF would be seen as incredibly bullish for the space,” Akhavam said. “I’d expect a lot of buy demand to hit NFTs on the back of any ETF announcements, as people would see that as major validation of the asset class. This would drive meaningful growth in NFT liquidity and market caps.”
Stacy Elliott is the editor.