Next Wave of Crypto ETFs

Now that the SEC has allowed both Bitcoin and Ether spot price ETFs the gates may have opened for more cryptocurrencies to be offered to the public in this manner. The next in line appears to be the 7^th largest cryptocurrency, XRP. Bitwise is filing with the SEC to offer spot price ETFs of this cryptocurrency. How is this going to shake out and if we see a whole raft of spot price crypto ETFs will that be useful to the average mom and pop investor?

Effect of Having a Spot ETF on a Cryptocurrency

Since its inception the whole range of Bitcoin spot price ETFs have resulted in about $18 billion flowing into Bitcoin ETFs while about $570 million has flowed out of Ether ETFs. There are several rationales for investing in or trading a cryptocurrency via a spot price ETF instead of directly. First of all an investor or trader need not know anything about crypto wallets or even the basics of buying and selling crypto directly. In addition, folks do not need to worry about the exchange where they are doing business being hacked and all of their crypto assets disappearing. For those used to trading stocks and indices in this manner, buying and selling crypto via an ETF is something they are used to doing. And, for the diversified investor, shares in a spot price crypto ETF are just one more asset in their portfolio and not something altogether different. The sum total of these factors has dragged Bitcoin assets into ETFs and dragged Ether assets out.

Will Every Cryptocurrency Eventually Have a Spot Price ETF?

Considering the large number of people interested in investing in or trading Bitcoin and Ether, it makes sense that spot price ETFs might be a viable way to go. However, while the ETF route seems to have helped Bitcoin, to a degree, it is not so clear that having an ETF has helped Ether. Thus, we will need to watch and see what happens if and when the XRP spot price ETF goes live to find out if this route will be useful to the non-dominant cryptocurrencies of the world. As with many investment opportunities, wise investors need to remember that all too often the folks who benefit from an investment scheme are the folks who set it up and take their profit off the top immediately while mom and pop investors very often left holding the bag with a so-so of even losing investment.

Will the Presidential Election Have an Effect on Crypto Spot Price ETFs?

We are just a couple of weeks away from the 2024 presidential election. While the Biden Harris administration has ramped up regulations on the crypto world, Donald Trump is promising anything and everything to crypto moguls in order to get their support. While the crypto world was adamantly against regulation prior to crypto winter, that has changed. As a rule investors like certainty. They know that markets go up and down and are willing to accept such risks. What they are not interested in are investments that are being manipulated out of sight of the investor. What regulation has done so far in the crypto world is clean up the mess left by folks like Bankman-Fried and make investing in crypto more predictable and more secure. This is a big part of why the SEC allowed spot price ETFs and why folks have put billions of dollars into Bitcoin spot price ETFs. While many in the crypto world may think that a Trump victory would breathe new life into crypto, it is more likely that crypto would be treated to more scandals and fraud while the economy tanked because of ill-conceived excessive tariffs on virtually all imports. A poll tax combined with a cut in tax rates for the highest earners would take the US toward the sort of income and wealth distribution that existed in France before the revolution and resulted in kings, queens, and nobility losing their heads!