Bitcoin ETFs on Track to Outgrow Mutual Funds by 2028

Bitcoin spot ETFs have crossed into territory that would have seemed far-fetched two years ago, and Bloomberg Intelligence analyst Eric Balchunas believes the category is on a direct path to eclipsing traditional mutual funds in assets under management before the decade ends.

A Growth Curve That Caught Wall Street Off Guard

When the SEC approved spot Bitcoin ETFs in January 2024, most institutional observers expected a measured uptake – cautious capital from risk-tolerant allocators, some curiosity from retail investors, and a gradual normalization over several years. What actually happened was faster and louder. Bitcoin ETFs pulled in billions within days of launch, with BlackRock’s iShares Bitcoin Trust (IBIT) becoming one of the fastest ETFs in history to reach $10 billion in assets under management.

Balchunas, who has tracked ETF flows for years at Bloomberg Intelligence, now projects that Bitcoin ETFs could surpass mutual funds in total AUM by 2028. That is not a small claim. Mutual funds represent decades of accumulated capital – retirement accounts, institutional mandates, pension allocations – built through distribution networks and regulatory familiarity that ETFs are only beginning to match. For Bitcoin ETFs to close that gap in roughly four years would require sustained inflows at a pace that challenges the historical norm for any new fund category.

The speed of adoption has been driven in part by the institutional infrastructure that came packaged with these products. Unlike holding Bitcoin directly, ETFs offer custody handled by established financial firms, regulatory oversight under SEC frameworks, and the kind of brokerage account accessibility that pension managers and financial advisors can plug into existing portfolios without special arrangements. That structural accessibility is doing real work in driving AUM growth beyond what early crypto-native demand alone could produce.

As of late 2024, total Bitcoin ETF assets under management had climbed to tens of billions of dollars across multiple issuers, with BlackRock, Fidelity, and ARK Invest among the leading players. The category had, in a matter of months, outpaced many established ETF categories that took years to reach comparable scale. That velocity is what gives Balchunas’ 2028 projection its foundation – not optimism, but the observed rate of institutional adoption compressed into a narrow window.

November’s Outflows and What They Actually Signal

November 2024 introduced a complicating data point. Bitcoin ETFs recorded significant outflows during the month, with investors pulling capital despite – or arguably because of – Bitcoin’s price movements drawing intense attention. Heavy outflows in a single month create a surface-level narrative about losing momentum, but the more accurate read involves understanding what drives short-term ETF redemptions versus long-term AUM trajectory.

Outflows from ETFs are often a function of profit-taking, rebalancing, or macro-driven risk adjustment rather than a loss of structural conviction in the product itself. When Bitcoin’s price moves sharply in either direction, ETF holders – particularly those using the product tactically rather than as a long-term hold – will exit positions. That behavior is entirely consistent with how equity and commodity ETFs function during volatile periods. It doesn’t erase the broader accumulation trend that has built AUM to current levels.

What matters for the 2028 projection is not whether November saw outflows, but whether the underlying driver of institutional adoption – the demand for regulated, accessible Bitcoin exposure – remains intact. The distribution infrastructure keeps expanding. More registered investment advisors are adding Bitcoin ETFs to model portfolios. Wirehouses that initially kept these products off their platforms have begun reviewing those restrictions. Each of those shifts in distribution adds a new layer of potential inflow that wasn’t accessible in prior months.

Balchunas has consistently pointed to the ETF wrapper itself as the decisive factor in reaching mainstream AUM levels. The 2028 timeline assumes that adoption among financial advisors and institutions continues at something close to its current pace, and that no major regulatory reversal disrupts the product’s availability. Neither assumption is guaranteed, but both are grounded in observable trends rather than speculative projections about Bitcoin’s price. The AUM target is fundamentally a distribution story, not a price story.

The outflow question also has to be measured against the full year’s inflow picture. Bitcoin ETFs generated some of the strongest net inflows of any ETF category launched in 2024, and isolated months of redemption activity don’t reverse that annual trend. The more relevant stress test for the 2028 projection is whether a sustained bear market in Bitcoin prices – not a single month of volatility – would cause the advisor and institutional community to structurally reduce allocations. That scenario has not materialized, and the product’s AUM has shown resilience across multiple periods of price weakness since launch.

Mutual Funds as the Benchmark, and Why That Comparison Holds

Using mutual funds as the AUM benchmark is deliberate rather than arbitrary. Mutual funds represent the dominant vehicle through which American retirement capital has been deployed for decades – 401(k) plans, IRAs, and institutional mandates have collectively built a base measured in trillions. For Bitcoin ETFs to reach that level of AUM concentration would signal not just product success but a genuine repositioning of Bitcoin as a mainstream portfolio asset rather than a speculative satellite position.

The 2028 target puts a specific, testable claim on the table. If Bitcoin ETF inflows slow materially, or if mutual fund AUM grows faster than current trends suggest, the projection fails. That specificity is what makes Balchunas’ call meaningful – it sets a measurable bar rather than a directional guess, and the next three years will determine whether the institutional demand that powered 2024’s launch momentum can sustain the trajectory required to clear it.

BlackRock’s IBIT alone has already demonstrated that a single Bitcoin ETF can accumulate AUM faster than almost any fund in history. The question now is whether that pace reflects a one-time burst of pent-up institutional demand that will normalize at a lower run rate, or whether it marks the beginning of a multi-year allocation cycle that keeps compounding the category’s total assets. Bitcoin whales sitting on significant unrealized gains add another variable – if large holders begin distributing into ETF-driven demand, the price dynamics that influence short-term outflows could intensify in ways that test the retail and institutional conviction underlying the 2028 thesis.