Highlights
- Vance Spencer forecasted Ethereum ETFs to capture 50% of Bitcoin ETF inflows.
- He also noted that institutional investment in Bitcoin and Ethereum ETFs will continue to surge.
- Spencer discussed regulatory impacts, including FIT 21 and SEC DeFi actions.
In a recent CNBC interview, Vance Spencer, co-founder of the venture capital firm Framework Ventures, shed light on the future of spot Bitcoin and Ethereum ETFs. According to Spencer, Ether funds are rapidly positioning itself to capture a substantial share of the inflows currently directed at Bitcoin ETFs. He expects a potential 50-50 allocation emerging as a standard for investors.
Ethereum ETF Set To Capture Bitcoin ETF Market
Spencer emphasized that the introduction of Ethereum ETFs has marked a pivotal moment in the crypto market, drawing significant attention from institutional investors. “The ETH ETF has followed hot on [Bitcoin’s] heels and it’s getting on some days this week more flows than the Bitcoin ETF,” Spencer noted in a CNBC interview.
He highlighted that this trend could lead to a balanced allocation between Bitcoin and Ethereum. This anticipation hinges on traditional finance (TradFi) capital beginning to flow into these assets. Moreover, the launch of Ethereum ETFs is reshaping the investment space, with many institutional investors considering equal exposure to both BTC and ETH.
“I think more and more people are going to have a 50-50 Bitcoin and ETH allocation going forward,” Spencer predicted. Moreover, Spencer pointed out that both Bitcoin and Ethereum have grown tremendously without institutional backing. Now, this trend is reversing with the introduction of spot Bitcoin and Ethereum ETFs.
“The spigot for traditional finance inflows has opened… Bitcoin ETF has been one of the best ETF launches of all time,” the Framework Ventures co-founder said. He highlighted that these ETFs are attracting substantial assets under management (AUM) with over $20 billion net inflows for BTC ETFs since launch in January. Recently, Goldman Sachs and Morgan Stanley revealed holdings in these ETFs.
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Spencer also mentioned that traditional financial institutions slowly increasing their exposure to these new asset classes. However, the pace of this shift varies among different players. “The big positions you see… Millennium had almost a billion of Bitcoin ETF in its book,” Spencer mentioned. Although he also noted that some hedge funds and banks have been more conservative, pairing back their positions in the second quarter of 2024.
FIT 21 & SEC Crackdown On Crypto
In addition, Spencer expressed optimism that regulatory clarity is on the horizon. He spotlighted legislative efforts like the FIT 21 Act, which aims to establish a clear legal framework for digital assets. “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 said. Also, the U.S. Securities and Exchange Commission (SEC) greenlighted Ethereum ETFs in July, marketing a major pro-crypto pivot.
However, the current environment remains challenging, especially with the SEC intensifying its crackdown on decentralized finance (DeFi) platforms. Spencer acknowledged the ongoing battles between the SEC and various DeFi projects but suggested that these confrontations might ultimately be beneficial.
“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 remarked. He pointed to the SEC’s mixed track record in court as a potential advantage for the crypto industry.
Looking ahead, Spencer expressed confidence in the long-term prospects of both Bitcoin and Ethereum amid ETF success. He highlighted that younger investors continue to favor these digital assets over traditional investments like gold. Hence, he argued that Bitcoin, currently worth about 5% of gold’s market cap, has significant room for growth, potentially reaching 20-30% of gold’s value.
On the flip side, Ethereum ETF outflows continued surging with $15 million negative flows on Friday, August 16. Moreover, the weekly outflow hit $14.1 million despite the first three days of inflows. Meanwhile, BTC ETFs maintained a strong position with $35.9 million inflows on Friday.
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