Why This ETF Expert Is Bullish on Ethereum and Says Washington’s Crypto Stance Is Misunderstood

As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed the evolution of various asset classes and their integration into mainstream portfolios. Having closely followed the crypto space for several years now, I must say that I am genuinely excited about its potential. The insights shared by Matt Hougan, Global Head of Research at Bitwise Asset Management, provide a compelling narrative about the future of Bitcoin (BTC) and Ethereum’s Ether (ETH).

It’s been a great year for Bitwise Asset Management.

As a crypto investor, I’ve been fortunate to witness firsthand the success of the specialist who has pioneered some of the most thriving cryptocurrency investment products. Their Bitcoin ETF, for instance, has managed to gather an impressive $1.2 billion within just nine months since its launch, while their Ethereum ETF has accumulated over $250 million in a mere 84 days. It’s truly exciting to be part of this dynamic journey!

As an analyst, I can express it this way: “In the face of industry titans like BlackRock and Fidelity, Bitwise is managing to keep its ground. The demand for a cryptocurrency-focused asset management firm is evident.

As a researcher, I’d like to add that this isn’t the full extent of the company’s growth. The company has significantly expanded its management of assets from approximately $1 billion to an impressive $5 billion, as mentioned by Hougan. Furthermore, Bitwise’s acquisition of ETC Group – Europe‘s leading Bitcoin Exchange-Traded Product (ETP) issuer – has given us a strong foothold in the European continent.

If you listen to Hougan, they’re just getting started.

He stated that we’ve moved into an era where Exchange Traded Funds (ETFs) are common in the crypto world. This implies that crypto investments will become more mainstream within people’s investment portfolios. As a result, there will be an increasing demand among investors for various types of crypto investment options, such as single-asset ETFs (for instance, spot bitcoin ETFs) or multi-asset products (these could potentially combine Bitcoin and Ethereum, for example).

For example, on October 7th, Bitwise applied to transform three of its cryptocurrency future ETFs into funds that follow trends and adjust their positions based on market momentum. The aim is to offer investors an opportunity to invest in the volatility of these markets while reducing potential losses.

Bitwise’s rise is taking place amid rapid technological advancements within cryptocurrency, where settlement times and transaction costs are continuously decreasing. This development suggests that mainstream adoption of crypto applications may occur more swiftly than many anticipate. Additionally, recent political changes in Washington might signal that the most challenging regulatory hurdles have already been overcome.

Hougan stated that while there might be some challenges ahead, he believes things will improve compared to what we’ve experienced in the past.

Ethereum’s appeal

If the tremendous success of bitcoin ETFs is the story of the year, the comparatively disappointing ether ETF flows has turned sentiment – at least on Crypto Twitter – against the second-largest cryptocurrency by market capitalization.

Within the realm of cryptocurrency, there’s a trend among many where they view Ethereum as outdated technology. Instead, they prefer discussing alternatives like Solana, Sui, Monad, Aptos, and other emerging platforms,” Hougan stated.

But for him, they’re missing the bigger picture.

Approximately 90% of the $170 billion stablecoin market is based on Ethereum, as highlighted by Hougan. Additionally, a significant number of tokenization projects, such as BlackRock’s BUIDL fund and DeFi protocol Ondo, are being developed using it. The same trend can be observed with popular crypto applications like Uniswap and Aave.

In essence, this entity is similar to Microsoft in terms of blockchain, as Microsoft was once seen as a traditional, established tech giant from the ’70s, yet it remains one of the top three companies globally. Similarly, if you’re a bank employee attempting to tokenize an asset, choosing Ethereum won’t likely lead to your dismissal.

From my perspective as a analyst, Ethereum functions as a robust platform for groundbreaking cryptocurrency applications. Consequently, the network’s appeal to investors stems from its practicality, with the additional benefit of generating revenue being an appealing bonus.

In essence, Hougan stated that client interest in Bitcoin (BTC) and Ether (ETH), which is Ethereum’s currency, is evenly split. Individuals worried about the financial situation or the future of the U.S. dollar tend to lean towards Bitcoin, while those more intrigued by the projects being developed on Ethereum express greater enthusiasm.

Hougan is very certain that the inflow of Ether into ETFs in 2025 will surpass that of 2024, and he also predicts that the inflow in 2026 will outdo the one in 2025. He believes that Ethereum requires more education compared to Bitcoin, but this education is gradually spreading.

The complexities of Washington

Another major development this year? The feeling that in Washington, crypto isn’t taboo anymore.

During most of President Joe Biden’s term, the White House generally adopted a hostile approach towards cryptocurrencies, as illustrated by its efforts to reject a contentious accounting measure, SAB 121, which hindered banks from holding crypto assets.

Trump’s pledges showcased a stark difference compared to the Biden administration’s frosty hostility. Moreover, as it turned out that nearly half of all corporate campaign contributions were from cryptocurrency firms, the Democratic Party adjusted its position. Vice President Kamala Harris, running mate for the presidential election, voiced her endorsement for blockchain technology in September.

For cryptocurrency investors, it’s crucial to recognize that regardless of the outcome of the upcoming presidential election in three weeks, situations rarely have clear-cut, only positive or negative results, as per Hougan’s explanation.

Hougan stated that “Washington’s stance on crypto isn’t strictly pro or anti,” rather, “politicians can range from outright hostile to unreasonably supportive, and everything in between.

In the year 2024, Bitcoin and Ether ETFs received approval within the crypto sector, as stated by Hougan. However, the SEC’s enforcement activity was noticeably lighter in September compared to the previous three years.

Hougan stated, “Let’s consider our past performance against what we experienced in 2022 or 2023. During those years, we faced some tough blows, while this year has been more successful for us. Have we received the Solana ETF? No, but it’s a progression of events.

A Harris presidency might not prove as detrimental to cryptocurrency as the Biden administration, given its perceived stance so far – although it’s unclear if she fully embraces blockchain technology. Looking ahead, discussions could focus on which aspects of the crypto sector gain advantage over others.

Regardless of who wins the election, it seems likely that Congress will pass a law concerning stablecoins. However, if Harris is elected, this legislation might advantage large financial institutions. Conversely, under Trump, the bill could encourage entrepreneurial ingenuity.

In a similar fashion, if Harris emerges victorious, Ethereum might find an advantage over rival smart contract platforms such as Solana (SOL) and Avalanche (AVAX). This is primarily due to the fact that these newer blockchains have yet to navigate through the same regulatory obstacles.

According to Hougan, cryptocurrency is likely to thrive no matter what happens, as it’s self-sufficient and only requires less interference from institutions like Washington.