ETFs
“Is Ether just Bitcoin Lite?” Broker Customer Questions Signal Gloomy ETF Adoption – DL News
- Ethereum is difficult to explain to investment professionals whose day job isn’t crypto.
- Large-scale asset allocators, like pension funds, hold trillions in potential value for ETFs.
Investors have adopted Bitcoin, thanks to crazy success of cash exchange-traded funds in the United States.
However, Ethereum ETFs will be harder to sell for large-scale institutional investors like pension funds.
This is according to Duncan Trenholme, co-head of digital assets at TP Icap, the world’s largest securities broker.
Bitcoin has a clear narrative that makes it easy for sales teams to explain.
Ethereum is more difficult to understand for investment professionals accustomed to traditional asset classes, Trenholme told DL News.
“Bitcoin has been widely discussed in mainstream media, as well as crypto media,” Trenholme said.
Although divergent opinions remain regarding the usefulness of Bitcoin as a store of value“To a large extent, people are widely aware of the asset and its role,” he said.
When it comes to Ethereum, Trenholme answers questions from institutional clients such as: “Is Ether just Bitcoin Lite?” “How is it different from Bitcoin? or “Why should it have a place in an investment portfolio?”
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Trenholme laughed as he imagined a hypothetical answer.
“I could say, ‘It’s a smart contract-focused network that is a base protocol for a multitude of different dApps.’
“And they’ll say… ‘What?’ »
Actual entries
This lack of a solid narrative could make Ethereum ETFs a slower success than their Bitcoin counterparts.
ETF issuers want to attract large-scale asset allocators such as pension funds, sources of real flows.
U.S. public pension funds – the retirement savings of government employees like teachers and firefighters – accounted for $6.1 trillion in assets at the end of March, according to Federal Reserve Data.
It’s still early for these funds to consider including Bitcoin, let alone Ethereum, in their portfolios.
Defined benefit pension funds and others are “only starting to talk to their investment committees” about including crypto in their portfolios, Manuel Nordeste, vice president of Fidelity Digital Assets, said recently.
Nordeste and Fidelity compete with BlackRock say they expect see gradual acceptance thanks to the safer options of ETFs.
Wild success
Bitcoin Spot ETFs from issuers including BlackRock, Ark Invest and Fidelity have been seen nearly $58 billion flocking there since their launch in January.
Analysts are divided on whether Ethereum ETFs will see the same type of adoption if approved.
Industry proponents like Ethereum co-founder and Consensys CEO Joe Lubin say there is huge pent-up demand.
The Securities and Exchange Commission is expected to approve Ethereum spot products in July.
Analysts are concerned that these approvals may be conditional on the removal of staking from issuers.
Yet others say the staking problem is unlikely to affect demand with large institutional investors.
Crypto market players
- Bitcoin is down 2.8% to $63,769 over the past 24 hours.
- Ethereum is down 2.6% at $3,479.
What we read
Jo Wright writes about the markets for DL News. Send him an email to joanna@dlnews.com.