As Ethereum, the second-largest blockchain network globally, gears up to be the focus of the next wave of spot crypto exchange-traded funds (ETFs), it faces a significant challenge: crafting a compelling sales pitch. Often described as “the internet of money,” a “world computer,” and “digital oil,” Ethereum’s highly technical nature and complex roadmap might be difficult for Wall Street to digest, potentially dampening demand for spot Ether (ETH $3,758) ETFs.
Markus Thielen, head of research at 10x Research, told Cointelegraph that the most effective investor pitches should steer clear of technical jargon. Here are three potential pitches that Thielen and other experts believe could effectively introduce Ethereum to Wall Street.
1. The Future of Finance
Positioning Ethereum as “the network empowering the future of finance” is a straightforward narrative that could resonate well with Wall Street investors. Ethereum currently supports nearly all major decentralized finance (DeFi) protocols, tokenized real-world assets, and stablecoins.
However, Thielen noted that Ethereum has seen a decline in user engagement, and the pace of recent network upgrades has been slow, potentially weakening this narrative. Additionally, Ethereum’s revenue generation relative to its market capitalization is minimal, which might make it less appealing as a cash-flow-producing investment, despite its staking yields being lower than treasury yields.
2. All-in-One Decentralization
Another approach is to present Ethereum as a “decentralization of all kinds of services” platform, powering everything from finance and social networks to artificial intelligence. Henrik Andersson, chief investment officer at Apollo Crypto, emphasized that Ethereum’s ecosystem extends beyond DeFi to include decentralized autonomous organizations (DAOs), social networks, and identity solutions.
This pitch highlights Ethereum’s versatility and broad application potential, showcasing its role in fostering a decentralized digital economy.
3. Faster Growing Bitcoin
A simpler yet powerful pitch is to frame Ether as a cryptocurrency with greater growth potential compared to Bitcoin. Andersson suggests that many investors might see Ethereum as a smaller, faster-growing crypto asset. With Ether’s market cap at $453 billion, Bitcoin’s market cap of $1.34 trillion is roughly three times larger, indicating significant growth potential for Ether.
Despite Ether’s price relative to Bitcoin declining from 0.085 in December 2021 to 0.055 today, Andersson believes that Wall Street investors won’t be deterred by Ethereum’s complex technical roadmap. However, CK Zheng, investment chief at ZX Squared Capital, warned that Ethereum’s declining price ratio and ongoing regulatory scrutiny by the SEC, alongside competition from Solana, could hinder the success of spot Ether ETFs.
Leveraging Institutional Endorsements
A powerful endorsement comes from BlackRock, one of the approved spot Ether ETF issuers. BlackRock has utilized Ethereum to tokenize its USD Institutional Digital Liquidity Fund, amassing $470 million in assets. CEO Larry Fink’s prediction that every stock and bond will eventually be tokenized on a blockchain further bolsters Ethereum’s case, given it already accounts for 71.9% of all tokenized financial assets on-chain, according to 21Shares analysts.
The SEC has approved 19b-4 applications from firms like VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise for spot Ether ETFs. These firms must wait for the SEC to greenlight their Form S-1 filings before trading can begin. Bloomberg ETF analyst James Seyffart predicts that these ETFs could attract 20% of the flows seen by spot Bitcoin ETFs, with Eric Balchunas estimating a slightly lower range of 10% to 15%.
In conclusion, presenting Ethereum as the future of finance, an all-encompassing decentralization platform, or a faster-growing alternative to Bitcoin, while leveraging strong institutional endorsements, could effectively capture Wall Street’s interest and drive demand for spot Ether ETFs.
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