The cryptocurrency market has been preparing for new products as spot Bitcoin ETFs celebrate their first birthday and Ethereum exchange-traded fund (ETF) reach the 6-month mark.
Market participants expect a more favourable regulatory climate with Donald Trump, whose stance on cryptocurrency is set to be confirmed as the next president. This could lead to the introduction of additional ETFs.
Trump’s public support of Bitcoin is already having a significant impact.
Nicholas Elward is the head of institutional products and ETFs for Natixis Investment Managers. According to him, Trump’s position has increased confidence in cryptocurrency investments.
Elward, in a recent note, wrote that “all signs are pointing to more positive development for crypto ETFs by 2025”.
The same optimism is evident in spot ETFs, funds that invest directly in actual cryptos rather than futures.
The Securities and Exchange Commission has received applications from asset managers like 21Shares Bitwise WisdomTree and Canary Capital to launch digital ETFs related to popular assets such as XRP Solana Hedera and Litecoin.
Atkins, the new SEC Chairperson, is expected to ease ETF approval
SEC’s crypto regulatory approach has been an important barrier for ETF approvals.
Analysts expect the tone to change with Gary Gensler, SEC chair, stepping down from his position on Inauguration day.
Paul Atkins has criticised the SEC for its strict approach to digital assets.
The approval of crypto ETFs could be facilitated by this change.
The regulatory issues remain despite the optimism. Dom Harz is the co-founder and of BOB, a blockchain firm. He told Barron’s: “The growth we are seeing in Bitcoin ETFs, as well as Ethereum ETFs, is only the beginning.”
Harz says that “there are still regulatory hurdles” to be overcome before XRP ETFs and Solana are approved.
He said that “we’ll see an increase in the use of single-asset funds across all sectors by 2025,” especially when it comes to well-known brands.
Bitcoin and Ethereum ETFs continue to dominate
Bitcoin and Ethereum are still the mainstays in the market, despite the excitement surrounding new ETFs.
According to JPMorgan analyst, Bitcoin funds have assets worth more than $100 billion, while Ethereum ETFs are worth $12 billion.
Grayscale Ethereum Trust, with its $4.6 billion assets, dominates Ethereum ETFs.
Analysts estimate that Solana ETFs will only attract $3 to $6 billion of net assets, while XRP Funds could only receive $4 to $8 billion.
JP Morgan analysts stated that
The crypto-ecosystem is unlikely to benefit from a new wave of [ETF] launch given the much lower market capitalization and investor interest in other tokens.
Harz noted that Bitcoin and Ethereum are dominant eco-systems.
Crypto ETFs are a good entry-level investment for new investors. They provide exposure to volatile assets, without the need of direct ownership.
Institutional winners: Opportunities
Major market participants will benefit from the evolving crypto ETF ecosystem.
Companies like Coinbase and BlackRock have already benefited from Bitcoin ETFs. They will likely see more gains in the future if there are new ETFs approved.
The demand for tokens of second tier may be limited. However, the combination between a crypto-friendly administration and an SEC that could become less restrictive has led to a cautiously positive outlook for 2025.
Bitcoin and Ethereum are likely to remain dominant, but there is a need for market diversification. Institutional players will be well-positioned in the future wave of crypto ETFs.
The post Why Trump’s presidency may lead to more crypto ETFs being launched could be updated as new information unfolds
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