Emily Walker
As President-elect Donald Trump prepares to start his second term at the White House on January 20, Bloomberg reports a surge of interest from Wall Street in new financial products targeting the cryptocurrency market.
Crypto ETFs Enter A ‘Wild West’ Phase
With Trump’s forthcoming term, ETF industry executives and legal professionals indicate they’re developing innovative strategies to attract a diverse range of investors.
The new crypto ETFs are expected to be varied, featuring a range of digital tokens, often using leverage, options, or quantitative methods.
Insiders believe that the SEC, under Trump’s leadership, will be more open to these new financial products compared to the past administration.
Aisha Hunt, a principal at Kelley Hunt law firm, described the current situation as a “Wild West” phase for ETFs, anticipating a rise in “complex leveraged and inverse” crypto products.
Although Trump previously called Bitcoin a “scam,” his changed attitude towards digital assets has led to renewed optimism. The expected SEC adjustments may better align with industry needs, enabling a wider variety of products, including altcoin-related offerings.
Various companies have already presented proposals to the SEC for ETFs based on digital tokens such as Solana, XRP, Litecoin, and Hedera. Prospects look bright, especially with the anticipated new regulatory approach.
Mainstream Demand for ‘Bitcoin-Plus’ Offerings
Sui Chung, who heads CF Benchmarks, noted a noticeable increase in interest following Trump’s election, particularly toward “Bitcoin-plus” products. He explains these offerings are meant to provide Bitcoin exposure along with other elements that yield unique returns.
This was evident with the launch of options on BlackRock’s iShares Bitcoin Trust (IBIT), which saw almost $2 billion in notional volume on its inaugural trading day via 354,000 contracts.
The Cboe, a digital assets derivatives exchange, has also announced its plans to introduce the first cash-settled index options tied to Bitcoin’s price, set to launch on December 2.
John Davi, chief investment officer at Astoria Portfolio Advisors, showed enthusiasm for intertwining Bitcoin into ETF model portfolios, especially following any price corrections in the cryptocurrency.
Davi foresees potential offerings that would provide exposure to multiple cryptocurrencies using investment techniques akin to traditional stock evaluations.
Shiliang Tang, president of Arbelos Markets, believes that “innovative strategies” will keep evolving in cryptocurrency ETFs, leading to products like leveraged ETFs, altcoin-centered funds, and diversified digital asset collections.
Currently, the leading cryptocurrency is priced at $95,500, reflecting a 1.2% decline over the last 24 hours.
Image courtesy of DALL-E, chart sourced from TradingView.com