My four favorite topics to speak about and write on over the last decade are blockchain, AI, Legal/FinTech and their future. Each had a separate narrative, but they are increasingly becoming interconnected. For this prediction post, I am focused on Crypto and how it is about to explode into the mainstream, in a far more consumable way.
To set the stage, in the coming days we will learn if the SEC will approve a “Spot Bitcoin” ETF, such that anyone can buy this security and essentially “hodl” bitcoin via this mechanism. What’s special is that the biggest financial institutions have all lined up to be a part of this, i.e. BlackRock, Franklin Templeton, Grayscale Investments, Valkyrie, ARK 21Shares, Invesco, VanEck, WisdomTree, Pando Asset AG and others. So, you could expect an eventual massive injection of capital into this space. None of this is financial advice.
As we stand on the cusp of a transformative era in the world of finance, the imminent arrival of Exchange-Traded Funds (ETFs) for cryptocurrencies has set the stage for a series of dramatic shifts. Here are my expected outcomes of an approved Bitcoin ETF and what we might expect in the next 12 months as crypto ETFs become a reality.
The Inflow-Induced Roller Coaster: After the zaniness which leads to the event, we'll witness a surge in ETF inflows, propelling the likes of Bitcoin and other cryptocurrencies skywards. However, this ascent could be a bit of a tease, potentially followed by a reflexive nosedive as inflows taper off. Alternatively, if the issuers and their affiliates decide to play the long game and accumulate during this phase, we might just sidestep this dramatic dump.
The Advertising Onslaught: Imagine turning on your TV or scrolling through your social feed without encountering an ad urging you to invest in crypto ETFs. Hard to picture, right? That's because we're likely to see an advertising blitzkrieg spearheaded by ETF issuers. They'll be echoing sentiments like those of Larry Fink, who, in mid-2024, famously proclaimed that everyone should allocate a sliver (say, 1%) of their portfolio to Bitcoin or other cryptocurrencies.
Ethereum: The New Darling: With Bitcoin hogging the limelight, attention will inevitably turn to Ethereum (ETH) as the next big thing in crypto ETFs. Thanks to its ties with CME futures and futures ETFs, ETH will be anointed as the 'silver to Bitcoin’s gold,' only with the promise of moving harder and faster in a bull market. Expect channels like CNBC to wax lyrical about it incessantly.
The Institutional Embrace: This phase marks a significant milestone. Banks, brokerages, and other financial juggernauts will start to incorporate an array of crypto products into their offerings. This isn't just about Wall Street; we're talking about a global shift where institutions, corporate entities, brands, and even nation-states begin to leverage public blockchains. Ethereum's Layer 2 solutions might be a favorite, but other Layer 1 blockchains could also emerge as beneficiaries. Just in case you are less familiar with Layer 2, it means a cheaper blockchain that eventually uploads its data to layer 1, the main chain, or database.
The Cultural Renaissance: As crypto becomes further ingrained in mainstream finance, we'll witness a renaissance in crypto-culture. This resurgence will catapult the value of digital artifacts, or Non-Fungible Tokens (NFTs), to stratospheric levels. These NFTs will represent everything digital or tangible as an asset. It will be the deed to your car or your house, or any ticket you buy to a game. It will be much easier to use.
And so there you have it: a forecast of the next year in the crypto world, as ETFs make their grand entrance in the U.S. If these predictions hold true, we're in for a wild ride through the landscape of finance and culture. Buckle up, because the journey promises to be nothing short of exhilarating, and annoying.