Looking for a Crypto ETF With Upside Potential? These 2 ETFs Are Worth a Closer Look.

The number currently resides at 174, but the universe of cryptocurrency exchange-traded funds (ETFs) frequently gains population, and that's saying something, because as of late Monday, Sept. 28, the combined market capitalization of the digital assets realm was nearly $2.9 trillion, with Bitcoin (CRYPTO: BTC) accounting for nearly $1.7 trillion of that figure.

One way to look at the movement sparked by Bitcoin ETFs is that the marriage of digital assets and the ETF wrapper reflects the pioneering spirit shared by many cryptocurrency investors and ETF issuers. That is to say, long gone are the days when Bitcoin was the only game in town for digital currency ETFs.

These two crypto ETFs are already hot, but they have more upside ahead. Image source: Getty Images.

Indeed, issuers have brought some, shall we say, interesting crypto ETFs to market. Believe it or not, there are multiple ETFs dedicated to Dogecoin (CRYPTO: DOGE), a token that started as a joke in 2013.

Relevant to crypto investors looking for ETFs with significant upside potential is the fact that some products on the market today focus on digital currencies with viable use cases, which could foster long-term price appreciation. That group of funds includes the Grayscale Zcash ETF (NYSEMKT: ZCSH) and the Bitwise Hyperliquid ETF (NYSEMKT: BHYP).

Age is nothing but a number

One of the big trends in the fund industry is converting other fund structures into ETFs. That's exactly what happened with the Grayscale Zcash ETF, which was born as a trust and converted to an ETF about a month ago. The fund's pre-ETF existence helped it come to market with $260 million in assets under management, but this ETF isn't resting on those laurels. As of Sept. 25, the fund has $995.7 million in assets, confirming the ETF conversion is paying dividends.

That rapid growth confirms this fund is a star among this year's bumper crop of new ETFs and that there's appetite for Zcash (CRYPTO: ZEC) in and out of the ETF wrapper. There may be more in store for this rookie ETF, and those good vibes could arrive in the near term. Sure, he's likely got skin in the game, but Zcash co-founder Eli-Ben Sasson recently said the digital currency could reach $5,000 before the end of this year. An ambitious projection to be sure, but if he's right, that implies the cryptocurrency would more than triple from current levels, powering the Grayscale ETF higher in the process.

A tripling in just three months may be asking a lot, considering that Zcash was once outside the top 80 digital currencies by market value and is now up to ninth place, but the fact is, privacy tokens are having a moment.

Yes, there's some fear of missing out in the Zcash market. Still, the rapid growth of the Grayscale ETF may signal that there's some "smart money" appetite for this cryptocurrency and that adoption of this asset is evolving beyond pure speculation.

Believe the hype

The Bitwise Hyperliquid ETF debuted in May and already has $204.7 million in assets under management. In ETF terms, that qualifies as an impressive start, particularly for a non-Bitcoin cryptocurrency fund.

Indeed, it's nice to be one of just three ETFs dedicated to this year's top-performing digital currency. Hyperliquid (CRYPTO: HYPE), the 10th-largest cryptocurrency by market value, commands that status because it's the premier platform on which perpetual futures, the futures contracts known as "perps" with no expiration dates, transact. Adding to the case for the Bitwise ETF is this data point: Over the past 30 days, global perps volume reached $597.8 billion, with Hyperliquid commanding $204.1 billion. That's more than triple the turnover on the next-closest chain.

Yes, Hyperliquid has more than tripled in value this year, and that's enough to make some investors wonder if there's more gas in the tank. Some experts believe the answer is "yes."

Market participants considering Hyperliquid, which traded below $87 on Sept. 28, or the Bitwise ETF can take heart in knowing that some projections call for the digital currency to rise to $147 by 2031, and, in a bull case scenario fostered by perps going mainstream, Hyperliquid could hit $456 by that year.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Hyperliquid. The Motley Fool has a disclosure policy.