- Bitwise analysts believe Bitcoin ETFs will have more impact than Ethereum ETFs, as institutional investors are more familiar with Bitcoin as a digital gold while Ethereum is seen as a tech stock.
- Bitcoin ETFs have two key advantages – earlier regulatory approval expected and Bitcoin’s use case as a store of wealth aligns with ETFs’ purpose, unlike Ethereum’s programmability.
- While Ethereum has unique attributes like staking features, inflows into Ethereum funds have been slow due to low crypto volumes when launched and other distractions.
The cryptocurrency investment landscape is witnessing an interesting debate as Bitwise, a leading crypto index fund manager, analyzes the potential influence of US Bitcoin and Ethereum exchange-traded funds (ETFs).
Bitcoin ETFs Poised to Have More Impact
Chief Investment Officer Matt Hougan and crypto analysts at Bitwise have shared valuable perspectives indicating that Bitcoin ETFs are positioned to wield more influence on the market than ETH ETFs. The analysts explained that institutional investors are growing increasingly familiar with Bitcoin, often viewing it as a digital version of gold. In contrast, Ethereum is seen as a high-growth tech stock, with its role in portfolios reflecting its nature as a smart contract platform and its staking features providing dividend-like cash flows.
Two Key Advantages for Bitcoin ETFs
Hougan emphasized two critical reasons why Bitcoin may prevail over Ethereum in the ETF arena – an expected earlier green light from regulators and its primary use case aligning with ETFs’ traditional purpose of serving as a store of wealth outside the fiat system. While Bitcoin is regarded as a tool for wealth preservation, Ethereum’s core functionality lies in its programmability, which enables complex decentralized apps and lending platforms. This aspect remains unchanged by the creation of an ETF.
Growing Appreciation for Ethereum’s Unique Attributes
Although Ethereum’s complexities exist, financial advisors are starting to value its distinctive attributes. However, the analysts observed that inflows into Ethereum funds have been slow this year, attributing this to historically low crypto volumes when Ethereum futures ETFs launched and distractions from events like Sam Bankman-Fried’s trial.
The Path Ahead
Looking ahead, the analysts predicted institutional interest in ETH would expand thanks to its unique staking features and foundational role in decentralized apps. However, they acknowledged that most advisors currently have limited crypto exposure, possibly contributing to their constrained engagement with recent crypto developments.
Bitwise continues working to secure regulatory approval for a Bitcoin spot ETF alongside other asset managers. This could further solidify Bitcoin’s position in investment portfolios and potentially catalyze broader institutional adoption.