We’re 14 months in since the largely successful launch of the first U.S. spot Bitcoin ETFs, and just rounded the corner on Bitcoin’s “Sweet 16”. Today we have dozens of new filings, on top of already launched spot Ether products, structured Bitcoin products and crypto futures ETFs.
Many thought we would never get here. Now where do we go?
That was the main question set to be addressed at ETF Exchange’s Tuesday afternoon panel in Las Vegas. Two years ago it was hard to imagine we would be having multiple panels on crypto, but here we are.
“What’s Next: One Year into Crypto ETFs” was moderated by Bloomberg’s Eric Balchunas, who steered lively, smart questions towards panelists Matt Kaufman, SVP and Head of ETFs at Calamos Investments, and Samir Kerbage, Chief Investment Officer at Hashdex.
The session began with a question: “Will Bitcoin hit $150k or $50k first?” About 60% of the audience, mainly financial advisors and ETF professionals, thought Bitcoin would reach the higher target first. When asked if it will hit one million before zero, only a few hands raised in either direction.
Delving deeper, Samir highlighted that inflows into Bitcoin ETFs surpassed initial expectations, driven significantly by hedge funds and large-scale investors, who favored ETFs due to their established financial infrastructure and accessibility. On the counter, Kaufman was more surprised to see the continued flows from retail investors, saying financial advisors have remained largely cautious, frequently inquiring but hesitant to actively allocate client funds.
Samir compared crypto’s trajectory to the early days of the internet. In other words, full of growth potential, but hounded by a hard-to-answer-question: how will we actually use it? From an investment perspective, both panelists agreed education is crucial for navigating this volatility. Samir emphasized that including crypto in a portfolio should be done in moderation, aptly noting, “The difference between poison and medicine is the dosage.” He explained that small, measured investments have allowed many investors to remain resilient, even during market downturns.
Offering practical advice, Matt cited leading industry research suggesting investors reallocate modest portions, around 1-2%.
Optimism and caution
Eric expanded the conversation to move towards answering the question “What’s next?” While he joked about a 2x levered MELANIA ETF being next, on a more serious note, he said, “The further you get away from Bitcoin ETFs the less assets they are likely to attract.” He pointed to cryptocurrencies with ETF filings such as Solana, Litecoin, XRP, and memecoins as examples.
While Bitcoin remains the “core application” of cryptocurrency akin to email’s foundational role on the internet, Samir believed other coins will find specific use cases that justify investor interest. He predicts substantial growth in the crypto index ETF space, as diversified applications emerge.
Matt reinforced the importance of investor responsibility in comprehending ETF offerings, asserting that the freedom of choice compels ETF issuers to maintain high-quality products. Samir identified behavioral biases, technology and adoption risks, and regulatory uncertainties as primary concerns for investors and advisors. However, he expressed optimism regarding reduced volatility and regulatory risks, noting the current administration’s relatively supportive stance toward crypto.
We heard a sense of cautious optimism at the panel. Experts do not think it’s likely to see the major drawdowns that were the hallmark of early crypto volatility. Their takeaway: If you believe in the growth of this technology, increase your allocation to it by increments.