Podcast Summary
Inevitable Approval of Ethereum ETF: The approval of an Ethereum ETF is expected, potentially surpassing the success of the Bitcoin ETF with increasing institutional interest and potential for staking. Long-term perspective needed as approval process takes time.
According to Matt Hogan and Ryan Rasmussen from Bitwise, the approval of an Ethereum ETF is inevitable, despite recent delays. They believe the Ethereum ETF will not only track the price of Ethereum closely, but potentially exceed the success of the Bitcoin ETF. The speakers also discussed the potential for staking inside the ETH ETF and the growing demand for Ethereum among traditional finance institutions. The Bitcoin ETF, which was approved in October 2021, has already surpassed $1 billion in assets under management. With the increasing interest in Ethereum and the broader crypto industry, the Ethereum ETF is expected to bring even more institutional capital into the space. The speakers also emphasized the importance of having a long-term perspective on these developments, as the approval process for financial products in the crypto industry can take time. Overall, the conversation highlighted the growing recognition and acceptance of cryptocurrencies by traditional financial institutions and the potential for significant growth in the crypto market.
New innovations and opportunities in crypto space: Kraken.com offers a secure platform for crypto trading, Mantle reduces gas fees and volatility, crypto tax calculator simplifies tax complexities, Bitcoin ETF market sees unprecedented growth, and resources and tools help navigate crypto landscape
The crypto space continues to evolve with new innovations and opportunities for both beginners and experts. Kraken.com offers a simple and secure platform for crypto trading, while Mantle is the first DAO-led layer 2 Ethereum ecosystem, which reduces gas fees and volatility. Crypto tax calculator simplifies the complexities of crypto taxes, making it easier for users to calculate their obligations. The Bitcoin ETF market has seen unprecedented growth, with Bitwise's BITW ETF exceeding expectations and bringing in over $12 billion in just two months. These developments highlight the increasing institutional adoption and mainstream recognition of crypto as an asset class. Whether you're a seasoned investor or just starting out, there are numerous resources and tools available to help navigate the crypto landscape.
Bitcoin ETFs changing perception of crypto industry: Major investors and institutions view Bitcoin as a legitimate asset class, unlocking wealth market access and potential for second adoption wave.
The approval and success of Bitcoin ETFs have significantly changed the perception of the crypto industry from the outside perspective. It has gone from being seen as a speculative vehicle or a scam to a legitimate asset class that could potentially surpass other commodities like gold. This shift in perception is due to the fact that major investors, institutions, and even mainstream media are now treating Bitcoin as a serious investment option. The approval of these ETFs has also unlocked a portion of the market for retail investors and independent financial advisors, but the larger wealth management platforms like Morgan Stanley, Merrill Lynch, UBS, and Wells Fargo are still in the process of completing their own due diligence before they can offer these ETFs to their clients. This means that there is still a significant portion of the wealth market that has not yet been accessed, leading to the potential for a second acceleration in the adoption and investment in Bitcoin.
Bitcoin ETFs open new avenue for institutional investment: Institutional investors gain access to Bitcoin through ETFs, but the approval and adoption process is ongoing, with only 30% of US wealth management industry's assets accessible, and the remaining 60-70% still evaluating.
The approval and adoption of Bitcoin ETFs represent a significant milestone in the crypto industry, as they provide a new avenue for institutional investors to gain exposure to Bitcoin. The process of getting these ETFs approved involves various regulatory hurdles and educational processes, which can take longer than in the crypto world's fast-paced environment. However, the potential inflow of trillions of dollars from institutional investors is still in the early stages, with only about 30% of the US wealth management industry's assets currently accessible to these ETFs. The remaining 60-70% of wealth is still in the process of evaluating and gaining access, and the approval and adoption process is moving faster than usual for ETFs. Overall, the Bitcoin ETFs' maturation is a long-term process, but the progress is happening, and the inflows are just beginning.
Retail investors have the edge in crypto markets: Institutional capital is flowing into crypto, giving retail investors an early advantage and potential long-term growth
Crypto presents a unique investment opportunity where retail investors have the advantage over institutions. Unlike traditional markets where institutions get first access, crypto allows retail investors to get in early and benefit from price appreciation before institutions enter the market. This dynamic is expected to continue as more institutional capital flows into crypto, leading to a potential equilibrium where persistent flows into crypto assets, such as Bitcoin ETFs, drive long-term growth. The process of unlocking this institutional capital is ongoing and may take up to 18 months or more. This shift in power dynamics is a significant development in the crypto space and a reason for excitement among retail investors.
Institutional Investments Shifting Towards Crypto: Institutional investments in crypto are increasing, leading to price stability and a larger role in diversified portfolios. Traditional financial firms are following suit, despite initial hesitation.
The inflow of persistent capital into cryptocurrencies through regular investments and systematic rebalancing is expected to have a sustainable upward effect on crypto prices, leading to a reduction in volatility over time. This trend aligns with the growing recognition that crypto is becoming a necessary component of a diversified investment portfolio. Institutions and financial firms, such as Fidelity Canada, are already incorporating crypto into their default investment strategies. The traditional investment approach, which advocates owning all assets in the global economy, also supports the inclusion of crypto. As more investors follow this approach, the 3% allocation to crypto in model portfolios could increase significantly. This shift represents a game changer for the crypto market, making it an essential part of mainstream investing. However, it's important to note that some financial institutions, like Vanguard, have been hesitant to embrace crypto. Their reluctance may be due to a desire to maintain a conservative image or an anchoring bias. Historically, they have resisted new investment vehicles, such as ETFs, only to later adopt them on a large scale. As the crypto market continues to evolve and gain wider acceptance, it's likely that more traditional financial institutions will follow suit and integrate crypto into their offerings.
Exploring the Demand for Bitcoin ETFs from Financial Professionals: Financial professionals, including crypto enthusiasts and skeptics, are increasingly interested in Bitcoin ETFs. The journey towards understanding Bitcoin's potential starts with its basics and role in a diversified portfolio. Comparisons to gold ETFs often lead to debates, but data suggests Bitcoin's impact on a portfolio is greater.
The demand for Bitcoin ETFs is coming from a diverse range of financial professionals, with some being crypto enthusiasts advocating for up to 5% allocation to Bitcoin, while others are skeptics who are slowly coming around after being presented with data showing the potential risk-adjusted returns. The educational journey for these professionals often begins with an introduction to Bitcoin's basics and its role in a diversified portfolio. The presence of crypto advocates in firms opens the door for further discussion and consideration. As for gold ETFs, the comparison between the two assets often leads to debates, but data shows that the impact of gold on a portfolio is negligible compared to Bitcoin. The perception of gold as a safe haven may be changing as Bitcoin emerges as a potential digital alternative with the added potential for higher returns.
Bitcoin as an Alternative to Gold: Bitcoin's potential for higher returns and similar risk profile to gold is making it a preferred alternative for portfolio diversification. The upcoming Bitcoin ETF could potentially surpass gold ETF's AUM, signaling a broader shift in traditional finance towards Bitcoin.
Bitcoin is increasingly being seen as a viable alternative to gold for portfolio diversification, with some advisors even considering an equal split between Bitcoin and gold for their clients. The potential for higher returns with a similar risk profile is a compelling argument for this shift. Additionally, the narrative around Bitcoin's potential market cap surpassing that of gold is gaining traction, and the upcoming Bitcoin ETF could potentially flip the gold ETF in terms of assets under management (AUM), a significant milestone known as the "flippening" in the crypto industry. This could signal a broader shift in traditional finance towards Bitcoin as a preferred allocation over gold. With the growing interest in decentralized finance (DeFi) and other crypto assets, it's likely that more ETFs wrapping these assets will follow.
SEC's lack of engagement decreases Ethereum ETF approval chances: The SEC's lack of communication with Ethereum ETF applicants has decreased the chances of approval from 60-70% to 35% in May.
The approval of an Ethereum ETF this year is becoming less likely due to the lack of engagement and communication from the Securities and Exchange Commission (SEC). The usual process for ETF filings involves a back-and-forth between the SEC and the applicant, with multiple amendments to the prospectus. However, with no signs of this process starting for an Ethereum ETF, analysts have decreased the probability of approval in May from around 60-70% to 35%. The SEC's chair, Gary Gensler, holds a significant influence in the approval process, and his current political climate and administrative setup make it difficult to predict when an Ethereum ETF will be approved. Despite this uncertainty, companies like Grayscale still intend to file for an Ethereum ETF when they believe it can be approved.
ETFs for Ethereum on the Horizon: Fidelity's correlation data indicates Ethereum ETFs are likely to launch by year-end, with TOKU simplifying token grants and Uniswap's new features enhancing swapping experience. Celo, a carbon negative blockchain, offers real-world use cases and low fees, making it an attractive alternative.
We're still in the process of seeing an Ethereum ETF come to fruition, despite some delays. The logic behind the approval of Bitcoin ETFs, which is the tight correlation between futures and spot prices, also applies to Ethereum. Fidelity's recent update on Ethereum's correlation to futures markets is seen as a strong indication of an upcoming ETH ETF. The speaker believes that Ethereum ETFs are more likely to launch towards the end of the year due to TradFi's ongoing digestion of the Bitcoin ETF. Additionally, TOKU offers practical tools for handling token grants and managing legal and tax obligations, making token compensation simpler. Uniswap's new features, such as limit orders and a persistent browser extension, aim to make swapping smarter and more convenient. Celo, a mobile-first carbon negative blockchain, is gaining popularity for its real-world use cases and low gas fees, making it an attractive alternative for users. However, TradFi is still in the process of digesting the Bitcoin ETF and may not be ready for the next asset yet.
Giving Bitcoin time to shine could benefit Ethereum ETFs: Allowing Bitcoin to gain traction and become more widely accepted before introducing Ethereum ETFs could make it easier for investors to understand and accept the unique features of Ethereum.
The delay in the approval of Ethereum ETFs could be beneficial for the industry in the long run. According to the discussion, advisors and investors are still in the process of understanding Bitcoin and its potential as a digital asset. Introducing Ethereum and its unique features too soon might overwhelm them. Therefore, allowing some time for Bitcoin to gain traction and become more widely accepted could make it easier for Ethereum to follow suit. Additionally, BlackRock's interest in Ethereum is a significant factor that increases the likelihood of an ETH ETF launch. However, it's essential to note that the approval process is unpredictable, and the timeline for the ETF remains uncertain. Overall, the industry should focus on educating investors about the potential of Ethereum and be prepared to advocate for its benefits when the time comes.
Approval of Ethereum ETF by year-end likely: The SEC is expected to approve an Ethereum ETF by the end of the year due to the success of Grayscale's Ethereum Trust, ongoing court cases, and tighter correlations and liquidity in Ethereum futures markets. However, political pressure and the SEC's discomfort with labeling Ethereum as a non-security could cause delays.
The approval of an Ethereum ETF by the end of the year is considered likely due to several compelling reasons. These include the success of Grayscale's Ethereum Trust and ongoing court cases that have established the difficulty of denying a spot ETF when futures are highly correlated with the spot market. Additionally, the liquidity and correlations in the Ethereum futures market are arguably even tighter than those in Bitcoin. The SEC is also supposed to consider the benefits of ETFs, such as lower costs, improved security, and enhanced trading and liquidity. However, political pressure and the SEC's discomfort with definitively labeling Ethereum as a non-security could potentially delay the approval. Overall, the lawsuit and investor protection arguments seem to be the most compelling reasons for the Ethereum ETF's approval.
SEC considering a simple Ethereum ETF, but it may evolve to include staking: The SEC is reviewing an Ethereum ETF, starting as a vanilla product, but may include staking capabilities within a year or two, lowering costs, improving security, and providing better access to US investors. Other crypto ETFs, like Bitcoin futures, Ethereum futures, and 50/50 Bitcoin-Ethereum futures, may emerge sooner.
The Ethereum ETF, which is currently under consideration by the SEC, is expected to launch as a simple, vanilla ETF first, without staking capabilities. However, it is believed that the ETF will evolve over time to include staking, making it more beneficial for investors. This evolution is expected to take place within a year or two. The industry is ready for this development, as it would lower costs, improve security, and provide better access to American investors. Other types of crypto ETFs that may emerge sooner rather than later include Bitcoin futures ETFs, Ethereum futures ETFs, and 50/50 Bitcoin-Ethereum futures ETFs, which offer exposure to both assets. These ETFs can be market-weighted or based on moving averages. The SEC should not act as a gatekeeper when it comes to these innovative investment products, as long as the risks are disclosed in the fund prospectus.
Approval of Bitcoin ETF brings new demand and investment opportunities for Ethereum ETF: An Ethereum ETF approval could bring in $1 trillion of long-term capital, significant price impact due to Ethereum's multiple use cases and technological advancements.
The approval of a Bitcoin ETF has brought new demand and investment opportunities, and the upcoming Ethereum ETF is expected to do the same. The staking mechanism for an Ethereum ETF is still unclear, but it's likely that it will be handled through the custodial level. The impact of an Ethereum ETF on the price could be significant, as it could bring in $1 trillion of long-term capital. While the Bitcoin ETF was a major catalyst for Bitcoin due to its primary use case as a store of value, Ethereum has multiple use cases and technological advancements that are currently driving its growth. The Ethereum ETF is not expected to be as small as some suggest, as the Ethereum futures have not been successful due to their rushed launch and market conditions at the time.
Ethereum's Potential to Revolutionize Interactions Online: Ethereum's role as a new tech platform attracts $1B investment, resonates with institutional investors, offers potential use cases like stable coins, decentralized apps, and AI, and upcoming Ethereum ETFs provide simple exposure to this future tech.
Ethereum is expected to attract a significant amount of investment, potentially reaching $1 billion in its first year, due to its role as a new technology platform with the potential to fundamentally change how we interact with each other, companies, and data online. This technology investment narrative resonates with institutional investors, and as Ethereum becomes more mainstream, it may be seen as a worthy addition to a technology sleeve, similar to an investment in the Internet in its early days. The potential use cases, such as stable coins, decentralized applications, and emerging AI, further highlight Ethereum's potential for growth. The upcoming Ethereum ETFs, issued by large asset managers, will provide investors with a simple way to gain exposure to this technology. Ethereum is not just a store of value like Bitcoin, but an investment in a future technology that has the potential to revolutionize the way we interact with technology.
Comparing Ethereum to Traditional Investments: Ethereum's deflationary nature and yield from staking make it a relatable investment for institutions, potentially leading to increased adoption and tokenization of real-world assets.
Ethereum (ETH) can be understood and valued similarly to traditional investments like dividend stocks or companies with share buybacks, due to its deflationary nature (burn mechanism) and yield from staking (similar to dividends). This analogy makes Ethereum more relatable and comfortable for institutional investors, who may be hesitant about Bitcoin due to its lack of these characteristics. The next step in the institutional adoption of crypto could be the tokenization of real-world assets on the Ethereum blockchain, making it easier for traditional finance to integrate with crypto.
Institutions experimenting with tokenizing real-world assets brings approval to blockchain technology: Institutions like JPMorgan and Franklin Templeton are exploring tokenization of real-world assets, driving growth of stablecoins and potential 10x increase in assets under management by 2025. Bull market vibes at DAS conference signal industry progress, but crypto remains risky investment.
The integration of real-world assets into the blockchain and crypto ecosystem is gaining significant momentum. Institutions like JPMorgan and Franklin Templeton are experimenting with tokenizing real-world assets, which is bringing a stamp of approval to the technology. The growth of stablecoins, which already account for a large portion of payment volumes compared to Visa, is another use case driving this trend. The mainstreaming of stablecoins could see a 10x increase in assets under management by 2025. The DAS conference, which is currently ongoing and is more institutional than past crypto conferences, is a testament to the industry's progress. The bull market vibes at the conference suggest that the industry has taken a significant step forward. However, it's important to remember that crypto is still a risky investment, and not everyone should jump on the bandwagon. But for those who are willing to take the risk, the potential rewards could be substantial as we continue to explore the frontier of blockchain technology.
