Ethereum ETFs Set to Challenge Bitcoin Dominance, Claims VC Expert

Vance Spencer, co-founder of Framework Ventures, recently discussed the evolving landscape of Bitcoin and Ethereum ETFs in an interview with CNBC.

He anticipates that Ethereum ETFs are poised to capture a significant share of investment flows traditionally directed towards Bitcoin ETFs. Spencer predicts that a 50-50 split between Bitcoin and Ethereum investments could become the new norm.

Spencer noted that Ethereum ETFs have gained substantial traction, often attracting more investment than Bitcoin ETFs on certain days. This shift reflects a broader trend where institutional investors are increasingly balancing their portfolios between both cryptocurrencies. As traditional finance (TradFi) capital begins to enter the crypto space, the introduction of Ethereum ETFs is reshaping investment strategies, with many institutions aiming for equal exposure to Bitcoin and Ethereum.

He emphasized that the launch of Bitcoin ETFs has been exceptionally successful, with over $20 billion in net inflows since January. This success has drawn interest from major financial institutions such as Goldman Sachs and Morgan Stanley. Despite this, some hedge funds and banks have been cautious, scaling back their positions in the second quarter of 2024.

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Regarding regulatory developments, Spencer is hopeful that initiatives like the FIT 21 Act, which aims to provide a clear legal framework for digital assets, will advance. He also highlighted the SEC’s recent approval of Ethereum ETFs as a positive sign for the industry, despite ongoing regulatory challenges, particularly with the SEC’s scrutiny of decentralized finance (DeFi) platforms.

Spencer remains optimistic about the future of both Bitcoin and Ethereum. He noted that younger investors are increasingly favoring these digital assets over traditional investments like gold. He believes Bitcoin, currently valued at about 5% of gold’s market cap, has significant growth potential, potentially reaching 20-30% of gold’s value.

In contrast, Ethereum ETFs have seen outflows, with $15 million in negative flows reported on August 16. This is despite initial inflows earlier in the week. Bitcoin ETFs continue to attract investment, with $35.9 million in inflows on the same day.

Alexander Stefanov