With the recent [first step] in an approval of the Ethereum Exchange Traded Fund (ETF), the crypto community is again abuzz with speculation (although it is rather subdued this time around). The big question on everyone’s mind: will it be as successful as the Bitcoin ETF?
Bitcoin, often seen as digital gold, is primarily meant for holding and storing digital value. The Bitcoin ETF’s success stems from this principle, making it easier for traditional investors to access and hold Bitcoin through a familiar financial product. Ethereum, on the other hand, is more than just a digital asset; it’s a technology platform that supports various applications, including smart contracts and decentralized finance (DeFi). I think this is an important distinction when considering the potential success of the Ethereum ETF.
The Bitcoin ETF saw record inflows, indicating strong demand from investors. However I wondering if, the Ethereum ETF may not offer the same allure, especially since it likely won’t allow staking. What’s this now? Staking involves “locking up” your Ether (ETH) to earn a share of the revenue through the ‘proof of stake’ method. It’s almost like interest. A portfolio that includes a growth play (Bitcoin) and an income play (Eth) makes for an interesting digital version of a ‘balanced’ portfolio. But without this feature being available in the ETF’s, one might wonder why not just hold ETH directly?
Institutional investors, such as large financial institutions and investment funds, are another critical factor to consider. My perspective might be influenced by an enthusiast’s mindset – the next way of adoption may not care for these details. The success of the Ethereum ETF will depend heavily on its appeal to this broader audience.
In another realm, the political influence around crypto is shifting significantly. It may have started with Blackrock, but now Trump’s making a play for the 40% or so of Americans who are pro crypto. Both sides in the US election are now warming up (or thawing out) to crypto. Trump’s support isn’t new, but seeing the Democrats soften their anti-crypto stance is significant. Crypto really is becoming more accepted and integrated into mainstream society. Not only will having an anti-crypto stance be costly in the future, institutional investors and everyday voters may be one of the superchargers behind the next crypto bull run.
Despite the happy vibes I’m picking up in the crypto-verse, I have some concerns too. We’re possibly entering a bull market yes, but we’re also potentially at an early stage global recession. This economic backdrop is worrying, because it creates uncertainty and potential instability. Some experts believe that crypto prices will continue to rise over the next 12-18 months, leading to the much-anticipated “crypto-summer.” However, it’s important to remain cautious and consider the broader economic and geo-political scene too.
The approval of the Ethereum ETF is a significant milestone yes. Crypto is becoming more mainstream. First it was the institutions, next it was the politicians…
I suspect the latest ETF, will pale in significant to the Bitcoin ETF, but that kind of makes sense when you consider the size of the market each asset occupies. Yes, we’re about to arrive in what appears to be a crypto summer, but there are several challenges in the world we haven’t seen for a while. If in doubt though, zoom out.
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