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Ethereum exchange-traded funds (ETFs) are gaining significant traction, with experts predicting they could soon capture 50% of Bitcoin ETF inflows, highlighting a shift in investor sentiment.
Ethereum ETF Poised to Capture 50% of Bitcoin ETF Inflows
Spot Bitcoin and Ethereum ETFs’ future was discussed by Vance Spencer, co-founder of Framework Ventures, in a recent interview with CNBC (via Coingape).
When it comes to the capital flowing into Bitcoin exchange-traded funds (ETFs), Spencer claims that Ether funds are quickly setting themselves up to take a sizable chunk of it. A 50/50 split, he says, might soon be the norm for investors.
Institutional Interest in Ethereum ETFs Surges
According to Spencer, institutional investors have taken notice of the tremendous interest in the cryptocurrency sector since the launch of Ethereum ETFs. Spencer mentioned in a CNBC interview that the Ethereum token exchange-traded fund (ETF) is “getting on some days this week more flows than the Bitcoin ETF,” indicating that it is closely following Bitcoin.
He stressed that this pattern may eventually cause Bitcoin and Ethereum to be evenly distributed. The infusion of traditional finance (TradFi) funds into these assets is crucial to the realization of this expectation. Additionally, many institutional investors are contemplating equal exposure to both BTC and ETH, as the launch of Ethereum ETFs is transforming the financial sector.
Spencer foresaw that “more and more people are going to have a 50-50 Bitcoin and ETH allocation going forward” when it came to Bitcoin and Ethereum. Spencer further noted that Ethereum and Bitcoin have expanded substantially in recent years despite the lack of support from major institutions.
Now, though, things are turning around because spot Bitcoin and Ethereum ETFs have been introduced.
“The spigot for traditional finance inflows has opened… Bitcoin ETF has been one of the best ETF launches of all time,” according to the co-founder of Framework Ventures.
$20 Billion in Bitcoin ETF Inflows Since January
He brought attention to the fact that, since their introduction in January, Bitcoin ETFs have received over $20 billion in net inflows, indicating that they are attracting considerable assets under management (AUM). Morgan Stanley and Goldman Sachs have now come clean about their ownership of these ETFs.
Spencer further noted that conventional banks are gradually diversifying their holdings into these emerging asset classes. However, how quickly this change occurs differs from one player to the next.
“The big positions you see… Millennium had almost a billion of Bitcoin ETF in its book,” Spencer stated.
Though he did point out that certain banks and hedge funds have been more cautious, reversing their positions in the second quarter of 2024, so there is that.
Furthermore, Spencer is hopeful that regulations will soon be more clear. The FIT 21 Act, which seeks to provide a transparent regulatory framework for digital assets, is one of the legislative endeavors that he emphasized. “If we get even one of those [bills] done, it provides a legal pathway for DeFi to exist and it kind of… does away with all the court cases,” he added.
Ethereum ETFs Gain SEC Approval, Marking Significant Shift in Cryptocurrency Support
Additionally, in July, the U.S. Securities and Exchange Commission (SEC) approved Ethereum ETFs, marking a significant shift in support for cryptocurrencies.
Nevertheless, the present climate is difficult, particularly because the SEC is cracking down harder on decentralized finance (DeFi) systems. Although Spencer did not deny the existence of continuing conflicts between the SEC and different DeFi initiatives, she did imply that these conflicts may prove to be advantageous in the long run.
“Having their day in front of a judge and being able to explain what they’re doing is ultimately going to be positive for these projects,” he said. He said the cryptocurrency business could benefit from the SEC’s inconsistent court records.
Spencer is optimistic about Bitcoin and Ethereum’s future prospects in light of the success of ETFs. Unlike more conventional investments like gold, he said, younger people still choose these digital assets. Bitcoin, he said, has a lot of space to develop and might eventually be worth twenty to thirty percent of gold’s market cap, up from its present value of around five percent.
Ethereum ETF Faces Challenges as Negative Flows Continue Despite Initial Inflows
Contrarily, on Friday, August 16, Ethereum ETF negative flows reached $15 million, continuing their increasing trend. The first three days of inflows weren’t enough to prevent the weekly outflow, which topped $14.1 million. On the other hand, with $35.9 million flowing into Bitcoin ETFs on Friday, they remained in a strong position.