Bernstein Says Crypto ETFs Could Extend beyond Bitcoin and Ethereum

Bernstein analysts believe that diversification presents a significant commercial opportunity for asset managers. It allows them to enter the rapidly growing digital asset market and benefit from increased demand and market growth.

In the world of finance, few innovations have garnered as much attention and excitement as the potential launch of crypto exchange-traded funds (ETFs). Bitcoin (BTC) has been the center of attention in finance for years, but the advent of crypto ETFs is poised to introduce a new era of diversified digital asset investments.

Analysts at Bernstein believe that the recent legal victory by Grayscale against the US Securities and Exchange Commission (SEC) represents more than just a single fund’s path to ETF conversion; it sets the stage for regulators to assess a broader spectrum of crypto assets within the ETF framework.

First Bitcoin ETF Expected to Launch in October

According to a Monday report led by Gautam Chhugani, the crypto ETF opportunities are not limited to BTC alone but could extend to a multitude of other crypto assets across the industry.

“The crypto ETF opportunity won’t stop at just Bitcoin (BTC), but will extend into multiple crypto assets,” noted Bernstein analysts.

The report indicates that the first spot Bitcoin ETF is expected to materialize sometime between mid-October 2023 and mid-March next year. This event marks a significant milestone not only for BTC enthusiasts but also for the entire crypto ecosystem, as it will usher in the first-ever Bitcoin spot fund since the inception of the crypto asset in 2009.

Bernstein analysts also anticipate that approval for all spot ETF applications, including Grayscale, will likely coincide with the launch next month.

Bernstein Analysts Predict a Surge in Ethereum ETFs

Based on Bitcoin ETFs’ expected success, analysts also foresee a surge in demand for Ethereum (ETH) spot ETFs. Experts at Bernstein point out that ETH has a similar market structure, characterized by both a traded CME futures market and a spot market, making it a natural candidate for ETF inclusion. Therefore, it’s reasonable to expect Ethereum ETFs to follow in Bitcoin’s footsteps.

“The industry’s push for an Ether (ETH) spot ETF follows immediately after, given ETH also has a similar market structure to a traded CME futures market and a spot market,” noted the analysts.

However, analysts emphasize that the crypto ETF revolution extends beyond these two leading digital assets. According to the report, the asset management industry is poised to explore opportunities beyond Bitcoin and Ethereum, venturing into the realms of other top-tier blockchains such as Solana and Polygon.

ETF Opportunities in DeFi

The analyst also predicts that the ETF opportunities could extend to the decentralized finance (DeFi) sector, further providing other investment options for investors.

DeFi represents a paradigm shift in the financial sector, offering lending, trading, and various financial activities on blockchains without the need for traditional intermediaries.

The report also highlights that while the crypto regulatory landscape remains dynamic and evolving, the global trend is clear: crypto ETFs are poised to revolutionize the investment landscape.

Countries like Brazil, Dubai, and Canada have already embraced crypto ETFs, and the analyst expects the United States to do the same. If doing so, cryptocurrencies will be granted greater legitimacy as a mainstream asset class.

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Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.