- Over the past week, Ethereum ETPs have outperformed their Bitcoin counterparts as interest grows in the possible July launch of an Ethereum ETF.
- Three reasons were provided by Bitwise CIO Matt Hougan for investors to consider adding spot Ethereum ETFs to their portfolio upon debut, as well as another rationale to stick with Bitcoin alone.
In the last week, global Ethereum exchange-traded products have done better than their Bitcoin BTC counterparts in anticipation of the much-awaited introduction of Ethereum spot exchange-traded funds in the United States.
According to data from K33 Research, Ethereum ETPs produced net inflows of 16,911 ETH for the fourth consecutive week. 12,523 BTC were taken out of Bitcoin ETPs during the third-worst week on record, primarily as a result of net withdrawals from U.S. spot ETFs.
Over the past four weeks, net inflows of 86,472 ETH, or around $300 million, have been recorded by global Ethereum ETPs. According to research released on Tuesday by K33 analysts Vetle Lunde and David Zimmerman, that is comparable to a $1.25 billion surge in inflows into Bitcoin ETPs that happened in November 2023, prior to the introduction of spot Bitcoin ETFs in the United States.
According to the analysts, this is yet another sign that U.S. spot ETH ETF inflows could equal or surpass U.S. spot BTC flows by about 25%.
When do the spot Ethereum ETFs begin trading?
On May 23, the U.S. Securities and Exchange Commission authorized 19b-4 forms for eight Ethereum ETFs that are spot markets, from companies such as Fidelity and BlackRock. Before trading can start, the issuers must still wait for their S-1 registration statements to become effective, which might take several weeks.
SEC Chair Gary Gensler projected last week that by the end of this summer, S-1 certifications for spot Ethereum ETFs might happen.
Exposure to Ethereum ETFs versus Bitcoin-only approaches
Bitwise CIO Matt Hougan explained three reasons why investors might want to add such funds to their portfolio, along with one reason to stick with Bitcoin alone, in light of the possibility that the U.S. spot Ethereum ETFs could start as soon as July 2.
Bitwise is one of the eight businesses that has finished submitting its S-1 registration paperwork to the SEC ahead of the debut of a spot Ethereum exchange-traded fund. In January, Bitwise introduced its own spot Bitcoin ETF to the US market.
Hougan stated in a message to customers on Tuesday that adding spot Ethereum ETF exposure made sense for three reasons: diversification, alternative use cases, and historical research.
Citing the fact that most investors hold a basket of stocks rather than a single stock and that, unless individuals have a very particular viewpoint, the default approach should be to just own the market, Hougan penned.
ETH, the cryptocurrency that powers the Ethereum blockchain, is currently valued at more than $420 billion on the market. That equates to about one-third of Bitcoin’s $1.3 trillion valuation. He went on, So, the starting point should be about 75% Bitcoin and 25% ETH.
According to Hougan, the Ethereum ecosystem offers more use cases, such as stablecoins and decentralized banking, whereas Bitcoin concentrates on offering the greatest kind of money. According to him, this makes it challenging to predict with precision which applications would be important in the long run. All that doing is expanding your exposure to the capabilities of public blockchains by adding ETH to your Bitcoin.
Hougan claimed that arithmetic was the ultimate justification for adding spot Ethereum ETFs. He pointed out that adding ether to a conventional 60/40 portfolio—60% equities, 40 percent bonds—has historically increased absolute and risk-adjusted returns over the course of a full cycle, as opposed to adding bitcoin alone.
But according to Hougan, it also made sense for some investors to stick to their original focus—bitcoin. With the most decentralized network, the strongest regulatory foundation, and the greatest potential market, the Bitwise CIO predicted that bitcoin will emerge as the leading new form of money in the cryptocurrency space.
He advised sticking with bitcoin if your main reason for investing in cryptocurrencies is your concern about the depreciation of fiat currencies, such as the US dollar, or about debt, deficits, and inflation.
You should hold a variety of crypto assets if you want to take a broad gamble on cryptocurrencies and public blockchains. Buy bitcoin if you wish to place a special wager on a novel digital currency, Hougan advised.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
