With President-elect Donald Trump set to begin his second term in the White House on January 20, Bloomberg reports that Wall Street is preparing to launch a new wave of financial products that invest in the crypto market.
‘Wild West’ Era For Crypto ETFs
In the lead-up to Trump’s second term, executives and legal experts in the ETF space report that they are developing diverse strategies to appeal to a wide range of investors.
The emerging crypto ETFs are expected to take on various forms, including those that focus on a broad spectrum of digital tokens, often employing leverage, options, or quantitative strategies.
Industry insiders anticipate that the new leadership in the US Securities and Exchange Commission (SEC) under Trump will be more receptive to these innovative products than the previous administration.
Aisha Hunt, a principal at the law firm Kelley Hunt, described the current environment as an “era of the Wild West” for the ETF industry, where “complex leveraged and inverse” crypto products will likely proliferate.
Although Trump’s initial presidency saw him label Bitcoin as a “scam,” his post-office enthusiasm for digital assets has shifted expectations. The upcoming changes in SEC are expected to align more closely with the industry’s interests, potentially paving the way for a broader array of products, including those linked to altcoins.
Several firms have already submitted proposals to the SEC for ETFs tracking digital tokens, including Solana, XRP, Litecoin and Hedera. The possibilities appear promising, especially with the new administration’s anticipated regulatory attitude.
Mainstream Interest In ‘Bitcoin-Plus’ Products
Sui Chung, head of crypto index provider CF Benchmarks, noted a significant uptick in interest since Trump’s victory, particularly in what he calls “Bitcoin-plus” products. Chung suggests that these offerings are designed to provide BTC exposure while incorporating additional components that can generate distinct returns.
This was further demonstrated by the launch of options on BlackRock’s iShares Bitcoin Trust (IBIT), which reached nearly $2 billion in notional volume across 354,000 contracts on its first trading day.
Cboe, the derivatives exchange for trading digital assets and securities, also announced the launch of the first cash-settled index options linked to Bitcoin’s price movements, scheduled to debut on December 2.
John Davi, chief investment officer at Astoria Portfolio Advisors, also expressed interest in integrating Bitcoin into his ETF model portfolios, especially if the cryptocurrency experiences a price correction.
Davi envisions potential products that could expose a range of cryptocurrencies using “rules-based investment methods” similar to those used in traditional stock screening.
Ultimately, Shiliang Tang, president of Arbelos Markets, expects “innovative strategies” to continue to be incorporated into cryptocurrency ETFs, leading to products such as leveraged ETFs, altcoin-focused funds and diversified baskets of digital assets.
At the time of writing, the market’s leading crypto is trading at $95,500, down 1.2% in the 24-hour time frame.
Featured image from DALL-E, chart from TradingView.com