On July 23, Anthony Pompliano, founder and CEO of Professional Capital Management, joined CNBC’s “Squawk Box” to discuss the recent approval of spot Ethereum ETFs and its implications for the crypto industry.
Pompliano highlighted that the SEC’s approval of spot Ethereum ETFs from various financial giants like 21 Shares, Bitwise, BlackRock, Fidelity, Franklin Templeton, and Invesco Galaxy marks a significant milestone in the crypto industry. He pointed out that these ETFs are set to begin trading today, signaling a major development that extends beyond Bitcoin, which previously dominated the spot crypto ETF landscape.
Pompliano reflected on the massive success of spot Bitcoin ETFs, particularly noting the substantial net flows into the BlackRock Bitcoin ETF (IBIT), which he says saw over $500 million in inflows just yesterday alone. He pointed out that while Bitcoin’s narrative as “digital gold” is straightforward and compelling, Ethereum’s story is more complex. He stated that Ethereum is often seen as a technology platform rather than just a cryptocurrency, making its narrative less clear-cut and its reception potentially less enthusiastic.
Despite this, Pompliano highlighted a key advantage for spot Ethereum ETFs: diversification. He mentioned that Wall Street investors often seek a diversified portfolio, and the inclusion of Ethereum alongside Bitcoin allows for a balanced investment approach. He suggested that this could lead to a notable, though perhaps not overwhelming, influx of funds into spot Ethereum ETFs.
Pompliano expressed skepticism about the potential impact of spot Ethereum ETFs on the cryptocurrency’s price, especially compared to Bitcoin. He emphasized that spot Ethereum ETF holders won’t have access to staking rewards, which are a significant aspect of Ethereum’s value proposition. Consequently, he stated that the flows into Ethereum ETFs might not match the magnitude seen with Bitcoin.
However, Pompliano believes that the approval of spot Ethereum ETFs is a broader signal for the market. He said that it indicates a wide array of altcoins might eventually make their way to Wall Street, i.e. that we are likely to see in the future the SEC approve spot ETFs for other altcoins. Pompliano noted that this could transform the crypto market from a niche segment to a more integrated part of the traditional financial system.
Addressing Ethereum’s competition, Pompliano noted that while Ethereum is a pioneer in the smart contract space, it now faces significant challenges from other blockchains that offer faster and cheaper transactions. He talked about his own investment decisions, revealing that he sold all his Ethereum holdings last year in favor of Solana, which he believes has more momentum and potential for growth.
Pompliano mentioned that Solana’s decentralized exchange volume has been eating into Ethereum’s market share, showcasing the competitive nature of the blockchain space.
Pompliano also touched on Bitcoin’s recent price movements, highlighting its sensitivity to geopolitical events and market uncertainties. He mentioned instances like the assassination attempt on former President Trump and President Biden’s decision not to seek re-election, where Bitcoin’s price reacted sharply to the news. He said that this behavior underscores Bitcoin’s evolving role as a financial asset that responds to global events, blurring the lines between the crypto industry and traditional finance.
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