In 2024, the landscape of institutional cryptocurrency investment is expected to be reshaped by the introduction of Bitcoin and Ethereum spot exchange-traded funds (ETFs), as predicted by Mike Novogratz, CEO of Galaxy Digital. The approval of these ETFs is seen as inevitable, marking a pivotal shift in the sector’s growth.

 

Galaxy Digital, under Novogratz’s leadership, has projected that 2024 will witness a surge in institutional engagement with cryptocurrencies. This surge is anticipated to be spurred by the sanctioning of BTC and ETH spot ETFs. Galaxy Digital, in collaboration with Invesco, has already submitted applications for Bitcoin and Ether ETFs to the SEC officials.

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In the midst of these developments, both Ethereum (ETH) and Bitcoin (BTC) have experienced notable price increases, reflecting the market’s optimism towards these impending changes. Ethereum, particularly buoyed by the news of BlackRock’s ETF initiative, saw its price surge, reaching highs around $2,100 on Gate.io, a clear indication of the positive investor sentiment.

The pump we’ve all been waiting for

With the investor mood turning optimistic in November 2023, ETF experts foresee the SEC greenlighting 12 major Bitcoin spot ETF proposals by the beginning of 2024. Novogratz emphasized during Galaxy Digital’s Q3 earnings discussion that this development would mark the onset of widespread institutional involvement, initially via Bitcoin ETFs and subsequently Ethereum ETFs.

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Novogratz anticipates a significant influx of institutional funds into cryptocurrency, especially if the U.S. government endorses Bitcoin. This approval is expected to encourage further exploration of other digital assets by investment allocators. He also foresees a spike in investments related to tokenization and digital wallets by 2025, emphasizing the crucial role of dollar-backed stablecoins in the cryptocurrency ecosystem.

 

The introduction of a Bitcoin ETF, according to Novogratz, will not only instill institutional confidence but also inject substantial capital into the cryptocurrency domain. He believes this will invigorate the entire system and facilitate the growth of various crypto projects.

 

The conversation also touched upon the potential impact of an Ether spot ETF. Novogratz noted that its reception might be less enthusiastic compared to a Bitcoin ETF, due to Ethereum’s staking-based validation model and the associated yields. For the ETF to be attractive, he suggested it would need to incorporate staking rewards.

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Blackrock acts on Ethereum ETFs

Moreover, BlackRock has unveiled plans to launch an Ethereum ETF, as revealed in a Nasdaq filing. This move signifies the asset management giant’s deepening commitment to cryptocurrencies. Following the announcement, Ethereum’s price experienced a notable surge.

 

BlackRock’s venture into the crypto space is part of a broader strategy to simplify crypto access for average investors. CEO Larry Fink has become a prominent advocate for cryptocurrencies, a shift from his previous skepticism. The company’s initiative, which includes a market-surveillance pact with other crypto players, aims to address regulatory concerns and facilitate the approval of such ETFs by the SEC.

 

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The development involving BlackRock and its plans to launch an Ethereum ETF represents a significant moment in the integration of cryptocurrencies into mainstream financial markets. BlackRock, recognized as the world’s largest asset manager, has shown a growing interest in cryptocurrencies, with this move further solidifying its position in the digital asset space.

 

The specifics of BlackRock’s Ethereum ETF initiative came to light through a Nasdaq filing. The ETF, if approved, will track the price of Ethereum’s ether (ETH) and aims to provide a more accessible avenue for average investors to engage with cryptocurrency. This is part of a broader trend of financial giants seeking to bridge the gap between traditional finance and the burgeoning crypto market.

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Following the announcement of this plan, Ethereum’s value saw a notable increase, peaking near $2,100, whilst BTC price shot up over $37,000 levels. Although ETH price retracted some of these gains, the asset still recorded a significant 9% increase over a 24-hour period, underscoring the market’s positive reaction to the news.

 

The proposed ETF will be listed on the U.S. exchange, pending regulatory approval. This development comes alongside the registration of the corporate entity “iShares Ethereum Trust” in Delaware, with iShares being the ETF division of BlackRock. This move signals BlackRock’s commitment to expanding its cryptocurrency offerings, which already includes efforts to list a Bitcoin ETF.

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BlackRock’s CEO, Larry Fink, has recently emerged as a vocal supporter of cryptocurrencies, marking a departure from his earlier skepticism. This shift in stance reflects a broader change in attitude towards digital currencies among leading financial institutions.

 

In its filing, BlackRock addressed potential SEC concerns, indicating that the prices for CME Group’s ether futures, which already have ETFs, align closely with spot ETH prices. This move by BlackRock is not just about launching a new product; it’s about legitimizing and integrating cryptocurrencies into the traditional financial system. It represents a growing recognition of digital assets’ potential and a willingness among major financial players to adapt to and incorporate these new technologies into their portfolios.

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