Rumors about the Exchange Traded Fund (ETF) track the top NFT collection, which stems from a social media post created by Pudgy Penguins CEO Luca Netz. However, ETF publishers and market experts said Decryption It is unlikely that such a fund is imminent, as NFT considers it “nonsense.”
Following an announcement from President Trump, NFT enthusiasts have begun to question whether an NFT reserve could be a possibility as US crypto-protectives are rumoured to be on the horizon. In response, Netz retweeted the post, adding that it was working on “something for JPEG.”
However, experts poured cold water into the idea in a series of interviews Decryption.
“NFT ETFs will face important technical and structural challenges, primarily due to the illiquidity of the NFTS,” said James Butterphyll, head of research at Coinshares. He said that such illiquidity “makes price discovery and market production nearly impossible, as is the reason why real estate ETFs are rare.”
Of course it’s more likely to be some kind of ETF than the spare, but the great American JPEG reserve rolls off the tongue
– Tylerd🧙♂️ (@tyler_did_it) March 2, 2025
Ryan Rasmussen, head of research at ETF provider Bitwise Asset Management, explained that because NFTs are not priced equally across the board, the technical challenge means that funds must build pricing methods. He pointed out Bitwise’s NFT index as an example of this.
Similarly, asset illiquidity prevents issuers from safely entering and leaving positions without affecting the market. That said, Rasmussen believes it is “possible” despite the technical challenges.
The reason ETFs are created is to help bring liquidity into the market or asset class. For example, according to Coinglass, the Spot US Bitcoin ETF currently holds $100 billion in assets under management, and has seen volumes worth billions of dollars each day since October. Rasmussen added that the demand for NFTs is not the same, and Rasmussen said much of that amount comes from investors who are less likely to invest in crypto.
“From my experience, the conversation we have is still in the headlines of NFT busts in 2021,” he explained. “To me, the idea that traditional investors are about to be exposed to NFTs as ETFs is not so unbelievable.”
Chris Akhavam, chief business officer at NFT Marketplace Magic Eden, argued that the potential of NFT ETFs will be picked up amid the sector’s next major growth. He explained that the current market is not liquid enough to support the additional demand that ETFs may bring.
“I don’t think the chances of this year’s NFT ETF passing are very unlikely or at all,” Rasmussen said. Decryption“I think most investors today believe that NFTs are nonsense. That’s not the way I have, but I’ve heard it.”
Hong Kong ETF provider Hashkey repeatedly conveyed similar feelings Decryption “NFT ETFs are likely to be a long-term outlook rather than a real reality for the time being,” as the market is still young and mature.
But that doesn’t stop market participants from dreaming.
The NFT ETF offers legitimacy and growth potential for asset classes that have been beaten from the 2021 highs, like Bitcoin and Ethereum before ETF approval.
“The NFT ETF will be considered very bullish for the space,” Akhavam said. “There is a high number of purchase demand that will hit NFTs behind the ETF announcement. People will see it as a major validation of the asset class. This will drive meaningful growth in NFT liquidity and market capitalization.”
Edited by Stacy Elliott.
