As Trump's return to the White House is confirmed, a crypto-friendly sentiment is surging, and Wall Street is ready to unleash a new generation of speculative products in the $3.2 trillion industry to satisfy investors' appetites.
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ToggleBitcoin spot ETFs attract $7.2 billion in assets post-election
Since the election (11/4), Bitcoin spot ETFs have attracted as much as $7.2 billion in inflows.
ETF issuers are eager to launch Altcoin ETFs
According to Bloomberg, with Trump's second presidential term looming, top ETF executives and lawyers say they are devising strategies to cater to all investors' tastes. The range of products they describe spans from defensive ETFs targeting crypto-curious professional fund managers to full-blown speculative bets aimed at "degenerates".
Aisha Hunt, head of the Kelley Hunt law firm, said:
The ETF industry is entering a "Wild West era," with new crypto-linked ETFs and increasingly complex leveraged and inverse products set to lead the charge as the SEC gets new leadership.
Since the election, Bit has risen over 40%, and SEC Chair Gary Gensler is set to step down on January 20, 2025, the day of Trump's inauguration, while Altcoins flagged by the SEC as unregistered securities are surging rapidly.
(Is the Altcoin era coming? SOL, XRP, ADA outperform Bit post-election)
This emboldens fund issuers to put forth various ideas, incorporating more speculative crypto products into ETFs, such as "Altcoins." Multiple digital asset firms have filed with the SEC to launch ETFs tracking cryptocurrencies like Solana, XRP, and Litecoin, with Grayscale proposing to convert its Grayscale Digital Large Cap Fund (GDLC) into an ETF, which includes Bit, Ether, Solana, XRP, and Avalanche.
(Grayscale's GDLC ETF proposal enters SEC review, multi-coin ETFs may be approved)
ETF issuer 21Shares CEO Hany Rashwan also stated that due to expectations of a "crypto-friendly regulatory environment" under the Trump administration, 21Shares will prepare more crypto ETFs, including reserving a ticker for a Dogecoin ETF.
Chris Newhouse, research director at digital asset risk fund Cumberland Labs, said tokens like Aave, Uniswap, and Maker are also ready for ETF products.
Crypto ETFs will play out TradFi scripts in various ways
John Davi, Chief Investment Officer at Astoria Portfolio Advisors, is considering adding Bit risk to the ETF model portfolios he manages if crypto assets pull back from their all-time highs. He expects issuers to soon provide "smart-beta" strategies that combine the benefits of active and passive investing. These strategies select and weight assets using specific factors (such as value, momentum, low volatility, etc.) to potentially outperform traditional market indexes.
You may have an ETF that can actually give you exposure to cryptocurrencies other than Bit and take some kind of active management, trend-following approach.
Shiliang Tang, President of leading crypto trading firm Arbelos Markets, also anticipates that time-tested investment strategies will be incorporated into crypto ETFs.
They will be running the TradFi playbook, but the strategies will absolutely not be traditional, including Bit-plus, dominance, leveraged ETFs, Altcoin ETFs, and basket ETFs.
