According to DLNews, the outlook for cryptocurrency exchange-traded funds (ETFs) in the coming years appears promising, with expectations of substantial growth. Kraken's head of strategy, Thomas Perfumo, anticipates that inflows could double to $50 billion by 2025. Perfumo noted that there are no apparent barriers to this increase in demand, and there are early indications of significant interest from major allocators such as sovereign wealth funds, endowments, and pension funds. He mentioned that large asset managers are considering allocating 1% to 3% of their portfolios to cryptocurrencies.
The demand for crypto ETFs is bolstered by key providers like Blackrock and Fidelity, which have played a crucial role in mainstreaming cryptocurrencies while managing costs and risks. The popularity of Bitcoin ETFs has been remarkable, with Bitcoin holdings for 11 providers exceeding $90 billion, according to Dune Analytics. These providers now control over 5% of Bitcoin's total supply. A significant factor driving further demand for Bitcoin is the recent electoral victory of Donald Trump. Perfumo highlighted that the clarity provided by the US election outcome has alleviated concerns about the future, offering comfort to those worried about 2025.
Trump's promises to the digital assets industry include building a strategic reserve stockpile of Bitcoin, dismissing SEC chairman Gary Gensler, and creating stablecoin legislation. Despite Bitcoin's rapid price increase, Ethereum, the second cryptocurrency to become a mainstream financial product, has experienced slower growth. Perfumo explained that Ethereum's complexity makes it more challenging for investors to understand compared to Bitcoin's straightforward narrative. However, Ethereum has recently seen a positive trend, with over $648 million flowing into the asset in the past five trading sessions. Spot Ethereum ETFs have recorded $95 million in net inflows since their launch.
Perfumo envisions a natural progression where Bitcoin's dominance may eventually decline, leading to increased capital flow into alternative assets like Ethereum. He expressed optimism about the future, stating, "I do see reasons to be bullish."
