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Opportunities for Cryptocurrency ETFs Extend Beyond Bitcoin to Include Multiple Digital Assets: Bernstein

Sep 4, 2023 at 05:22 pm

The cryptocurrency industry's pursuit of an Ethereum (ETH) spot ETF will swiftly follow the approval of a Bitcoin (BTC) ETF, thanks to ETH's similar market structure, involving a traded CME futures market and a spot market, according to a recent report.

Grayscale recently achieved a significant legal victory against the U.S. Securities and Exchange Commission (SEC), extending beyond the conversion of the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). This court ruling provided clear principles for regulators to assess spot ETF applications, as reported by broker Bernstein in a Monday report.

Analysts, under the leadership of Gautam Chhugani, underscored that the potential for cryptocurrency ETFs reaches far beyond Bitcoin. The industry anticipates the debut of the first spot Bitcoin ETF sometime between mid-October and mid-March, with simultaneous approval for all spot ETF applications, including those from Grayscale, as indicated in the report.

The report further highlighted that the approval of an Ethereum spot ETF would promptly follow that of Bitcoin, given the similar market structure shared by Ethereum, featuring a traded CME futures market and a spot market.

Furthermore, the asset management sector is projected to expand its focus beyond Bitcoin and Ethereum, venturing into other prominent blockchains like Solana and Polygon, as well as significant decentralized finance (DeFi) assets. DeFi encompasses various financial activities conducted on a blockchain without traditional intermediaries, such as lending and trading.

The report emphasizes that this represents a substantial commercial opportunity for the asset management industry, enabling it to generate substantial fees within the rapidly expanding cryptocurrency asset class. The report also notes that the recent legal successes in the cryptocurrency sector, along with improved prospects for ETFs and growing institutional interest, are positioning the crypto industry for an unprecedented cycle driven by capital, as opposed to the retail-led cycles seen in the past.

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