The United States Securities and Exchange Commission (SEC) has officially approved two new exchange-traded funds (ETFs) combining Bitcoin and Ethereum. Proposed by Hashdex and Franklin Templeton, these ETFs mark a significant step in diversifying cryptocurrency investment options available to the public.
According to the SEC’s approval order, these products resemble spot-based Bitcoin and Ethereum ETFs that the agency approved earlier this year.
Nate Geraci, president of The ETF Store, highlighted the potential implications of this approval. He said that other large-scale sellers, such as BlackRock, a financial firm, may now consider creating similar products.
This could increase the spectrum of competition on the cryptocurrency-based ETFs. According to them, the demand for these ETFs could be high, especially with financial advisors acting in the capacity of diversity seekers.
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Allocation and Launch Timeline
The approved ETFs are market capitalization-weighted, with Bitcoin constituting approximately 80% of the portfolio in both products. This heavy allocation to Bitcoin reflects its dominance in the cryptocurrency market. Ethereum makes up the remaining share, exposing the second-largest cryptocurrency by market capitalization.
Bloomberg analyst Eric Balchunas reported that these ETFs are expected to launch in January 2025. These came after the SEC gave the green light to various Bitcoin ETFs at the start of 2024, which saw an uplift in the cryptocurrency market. It is crucial to note that those developments lay ahead of establishing cryptocurrencies as an investment tool.
Broader Implications for the Cryptocurrency Market
Ethereum ETFs, which debuted in July, initially experienced a lukewarm reception but recently recorded two consecutive weeks of positive inflows. This implies increasing demand for cryptocurrency ETFs despite past difficulties.
Despite nodding to Bitcoin-Ethereum combo ETFs, the SEC has not approved other cryptocurrencies’ ETFs. Recent filings for Solana-based ETFs and other altcoins have been met with hesitation, with the SEC indicating that approval for such products is not imminent.
Conclusion
The SEC’s approval of Bitcoin-Ethereum combo ETFs highlights the evolving landscape of cryptocurrency investments. As these products prepare for their launch in January, they are expected to shape investor interest and market dynamics further.
The move reflects a growing trend of integrating cryptocurrency assets into diversified portfolios. However, the SEC’s cautious approach to altcoin ETFs suggests that broader approval may still be some time away.
Also Read: BlackRock’s iShares Ethereum Trust Leads ETF Inflows Amid Market Volatility
