Interview - Eric Balchunas, Bloomberg Senior ETF Analyst

“Bitcoin ETFs could triple gold ETFs in the next 3 to 5 years”

We met Eric Balchunas in Paris on a radiant summer day, in the refined calm of Hôtel Château Voltaire, a few hundred meters away from the noise of the Proof of Talk conference, an intense gathering of crypto entrepreneurs, thinkers and innovators. Eric, accompanied by his colleague Henry Jim, made time between two panels to sit down with us for an open conversation. Despite still shaking off the effects of jet lag, and a busy schedule, Eric was characteristically enthusiastic to give us his insights about his expertise field: ETF. As Senior ETF Analyst at Bloomberg, he’s become one of the most authoritative voices on the evolution of exchange-traded funds and their growing intersection with crypto. He is also a published author of two books on markets and finance, most notably the acclaimed The Bogle Effect, and is currently at work on a new one.

Our discussion, casual yet incisive, ranged across ETF mechanics, the shifting U.S. regulatory landscape, how retail investors behave, and where all of this might be headed. Edited lightly for clarity, the interview captures not only Eric’s deep technical knowledge, but also his capacity to connect macro trends with real-world consequences. Tellingly, he foresaw the approval of a Solana ETF in the U.S., a development that materialized just days after our conversation.

A genuine expert, and above all, someone who took the time to learn about Bitcoin and to understand why it matters.

CoinShares: crypto ETFs were launched last year in the U.S., and they’ve been a huge success. Did you see that coming?

Eric Balchunas. A little. We were pretty bullish—me and James Seyffart on my team. We were covering this relentlessly, obsessively. I remember we asked each other how big they would get. We guessed $10 to $15 billion in net flows in the first year. They actually hit $38 billion—more than double our high estimate. If you know anyone who’s launched ETFs, you know that getting net new flows is the hardest part. Assets can increase just from market appreciation, but net flows are like net sales, you have to convince people to buy the ETF. Today, they’re over $40 billion, and with market appreciation, they’re now around $120 billion. That’s astonishing. Gold took over a decade to hit that number. U.S. Bitcoin ETFs are now just shy of gold, and we think they could triple gold ETFs in the next 3 to 5 years. In retrospect, I see why they became so popular. For the average person who wants exposure to Bitcoin, it’s full of friction. Crypto exchanges charge a lot. Setting up a wallet, transferring funds from a bank, it’s a pain. With an ETF? You just roll out of bed, log into Schwab, click "Buy," and you're done. One basis point spread, 20–25 bps annual fee. And it’s stored by one of the biggest asset managers in the world, with the SEC stamp of approval. It feels safe and regulated. Sign me up. The ETF’s benefit-rich structure really shines here. It’s a win for crypto, for Bitcoin, but also for ETFs. It demonstrates how convenient, easy, and cheap they are. Many U.S. investors now rely on ETFs for all types of exposures.

Did it help legitimize crypto?

Absolutely. When BlackRock filed for an ETF in June 2023, it was less than two years after the FTX collapse, which left terrible PR in the air. Tom Brady went down with that ship. So did Larry David, Steph Curry, Matt Damon. It was a disaster. Crypto felt fringe. Bitcoin was at $30,000. And BlackRock filed at this time. It was, to me, a moon-landing moment. If it had been any other issuer, it wouldn’t have carried the same weight. But BlackRock is the largest asset manager in the world. So people asked, "What do they know?" After that, others followed: Fidelity, Invesco, Ark. The SEC eventually approved them. As ETFs gained assets, they legitimized the space. Institutions jumped in, a couple of pensions, some hedge funds. Retail investors took note. Then Trump won, bringing in what is called a strategic reserve. The narrative just kept building. Now you see corporations adding Bitcoin to their balance sheets, even governments considering it as a reserve asset. To me, BlackRock marked Part 2 of the story. Part 1 was retail: figuring things out, navigating scams. Part 2 is the financialization of Bitcoin, bringing it into the major leagues. The ETF was the catalyst. 

Yet, this ecosystem is still maturing. What’s your personal view on digital assets?

I knew they existed. The Winklevoss twins filed for a Bitcoin ETF back in 2013, so I had to learn a bit. But as a Gen Xer (or "boomer," according to my 14-year-old son), I thought crypto was like Taylor Swift, something for younger folks. Then two things made me take it seriously: first of all, its ability to recover from massive drawdowns. It should have died three times, but came back to hit all-time highs. That earned my respect. The second thing is that it irritated all the right people. If you’re uptight or a scold, it really gets to you. That told me it had substance. Then I started reading more. The deeper you go, the more you get orange-pilled. If you believe that governments will keep printing money to solve all problems, and global debt is a huge issue, then Bitcoin makes sense. As Lyn Alden says, "Nothing stops this train." Fiat was cut off from gold in the '70s. Since then, debasement has been real. If you believe that, Bitcoin deserves a fair shot. Also, Bitcoin’s design is elegant. It’s a culmination of 20 years of tech development. Big ideas aren’t born from eureka moments. They emerge when someone blends great ideas at the right time. That’s how ETFs were born. And that’s how Bitcoin was born. As someone who covered Vanguard and ETFs, I saw parallels between early ETFs and early crypto. That intrigued me. So yes, the more you learn, the more you respect it, maybe even want to invest. That said, I’m a Vanguard-Boglehead guy. I still believe in low-cost index funds, stocks, and bonds. Crypto folks want none of that. So I’m not all-in. But I have allocated a little to Bitcoin. It goes a long way. It’s like hot sauce, volatile, but you only need a little. And at recent conferences, I keep seeing TradFi people making the move into crypto. They see the potential, the tech innovation. Compared to TradFi, crypto feels exciting, new.

Do you think that retail investors are getting savvier as they seem to be moving from stock picking to ETFs?

ETF investors are the smartest out there. ETFs have no distribution fees. Brokers can’t just dump bad funds on you. You have to find ETFs yourself. That means ETF users have navigated the noise. They’re fee-conscious. Their portfolios compound better. ETF investors are the smart money. Crypto? It varies. If you went all in on Bitcoin, you look like a genius in hindsight. But no one knew. Then you have altcoins, some go nowhere. Then there are memecoins, which are basically gambling. Same with ETFs. Vanguard is like Bitcoin: solid. Then there are speculative ETFs like tech sector or uranium. Then there’s the wild stuff—2x Nvidia, leveraged ETFs, we call them degen products. There’s a degen segment in both spaces. I can’t say who’s smarter. Someone YOLO-ing into a 2x MicroStrategy ETF may not be wise. But long-term Vanguard holders? Very smart. Crypto has smart people too. It also has a youthful, fun culture you don’t see in traditional ETFs. Memecoins reflect that. And I like how crypto folks own their losses. If their coin tanks, they throw on the McDonald's hat. TradFi people are more uptight.

So if I had to generalize, I’d say Vanguard investors know their stuff. Some crypto people don’t really dig into fundamentals like dividends, cash flow, etc. They’re not always interested in learning about traditional investment metrics.

What do you think about the current evolution of the regulatory landscape in the U.S.?

It’s definitely opening up. The Trump administration appointed a new chair, Atkins, which is a big shift, especially with Gensler gone. Hester Peirce now has more influence, and she’s been pro-crypto all along. I think the SEC will roll out a framework outlining what they will approve, which should reduce the circus around every coin launch. In the next five months, I expect to see many coins approved as spot ETFs, which is what the market wants. Take Dogecoin, for example. It has many traits of a viable asset, though it lacks utility. Its approval would be significant for other memecoins. The real wild card? The Trump coin ETF. It’s a total meme asset, but it might pass because it’s politically charged. Does the SEC want to have a call from their boss if it rejects it? I suspect this SEC will draw the line fairly liberally. It won’t be total chaos, but definitely more relaxed and libertarian than before. Expect considerable deregulation, and that’s already started.

We’re seeing a wave of new Bitcoin treasury companies. Do you think they compete with Bitcoin ETFs?

Not really. Maybe a little. MicroStrategy is a unique case. They sold convertible bonds and applied smart financial engineering. That strategy worked because when they started, there weren’t ETFs. For a while, they acted as a proxy ETF, with some leverage built in. The thing is, when you buy into a treasury Bitcoin company, you're not holding pure Bitcoin. You’re exposed to leverage. Your performance can be higher or lower than Bitcoin’s. But we found out that most U.S. investors want the real thing. They want an ETF that tracks spot Bitcoin directly, like how GLD tracks gold. They want certainty. When they're building a portfolio and they add the crypto piece, they want it to behave predictably. These treasury companies will appeal to people who like the CEO, or the company’s message. More like hardcore fans or hedge funds. But for the mass market? They’ll go with ETFs every time.

How do you see the ETF pie grow in the future? 

We are hugely bullish. We have ETFs globally currently being at about 15 trillion and we see them going to 35 trillion in the next ten years. And that’s only a 10% growth annual rate. We're being conservative because we don’t think the stock and bond markets will go up 20% annually.  Still, the flows are solid. Last year broke records in every region—Europe, the U.S., everywhere. ETFs are fast, cost-effective, and packed with benefits. They’re hard to beat. The only potential disruption is tokenization. Will investors get their own wallets and buy tokenized stocks or ETFs? Maybe. But it’s more likely that ETFs will integrate blockchain behind the scenes. When you click "buy," the settlement and recordkeeping might use blockchain, but the user experience will stay simple.

If that’s tokenization, then I’m very bullish. But I don’t see people abandoning ETFs like VOO—which gives you the whole market for almost no fee—just to deal with wallets. That’s a tough sell. ETFs are already near perfect. Blockchain might optimize the backend, but ETFs will remain the go-to vehicle.

Flash round to conclude. Personally, what’s your pick between stocks, bonds, or crypto?

Without giving financial advice,  If it’s just Bitcoin and not a weighted crypto basket, I probably lean towards Bitcoin. It’s scarce, and the institutional demand is ramping up. Institutions manage over $100 trillion in assets, just 1% allocation is $1 trillion. That’s massive. Bitcoin’s fixed supply and growing demand make for strong math. Of course, there could be a black swan. But I’m bullish on U.S. stocks, too. Still, Bitcoin’s scarcity is powerful.

I think we all know the answer but ETF or self-custody?

ETF for now. Definitely. Have you played fantasy football? We need to make Bitcoin as easy as fantasy football. Wallets today are still too complex. Even the ones with screens are confusing. When it gets easier, I might switch to self-custody. For now, ETFs eliminate that friction.

U.S. Dollar or Bitcoin?

Jeez…. Both have roles. The dollar is strong. But Bitcoin acts as a check, a kind of policeman on fiat. Now that Bitcoin exists, governments may be more disciplined about printing money. That’s a positive force. Bitcoin isn’t anti-American. If anything, it’s better to have a neutral currency like Bitcoin than a rival nation’s currency. At least now there’s an alternative. That alone is powerful, even if you don’t invest in it.

Mainstream media or prediction markets?

Prediction markets—hands down. In the last election, only Polymarket came close. Polls? Who knows what they’re sampling? It’s confusing. I like markets because they’re honest—money wants to make money. That’s why I like covering markets. In the tariff tantrum, headlines screamed disaster, but stocks went up. Markets cut through bias. Polymarket does that for politics, events, you name it. They even have a market for “When will Jesus return?” I think it’s at 2%. Wild stuff, but fun and revealing. I trust that more than polls.