Bloomberg ETF analyst James Seyffart argues the present market represents an altcoin season via digital asset treasury corporations somewhat than traditional token value rallies, with upcoming ETF approvals unlikely to replicate Bitcoin’s institutional success.
Throughout a Sept. 4 interview with Milk Highway, Seyffart said digital asset treasury corporations (DATCO) have generated large returns whereas particular person altcoins stay comparatively subdued in contrast to earlier cycles.
He added:
“I believe that is the alt season. This has been the alt season. These DATCOs, I imply, they’ve been on absolute hearth.”
Additional, the SEC’s new framework for cryptocurrency ETFs positions roughly ten belongings for rapid approval, together with Dogecoin, Chainlink, Stellar, Bitcoin Cash, Avalanche, Litecoin, Shiba Inu, Polkadot, Solana, and Hedera.
Further tokens, like Cardano and XRP, might qualify inside months as soon as futures contracts attain the six-month requirement on CFTC-regulated exchanges.
Nevertheless, Seyffart tempers expectations for altcoin ETF demand in contrast to Bitcoin merchandise. He famous:
“Is it going to be the extent of curiosity that a Bitcoin, the Bitcoin ETF launch had? I completely not.”
Institutional choice for diversification
Seyffart expects basket merchandise containing a number of cryptocurrencies to appeal to considerably extra institutional capital than particular person altcoin ETFs.
Two such merchandise from Grayscale and Bitwise await SEC approval after receiving stay orders following preliminary technical approval.
Seyffart famous that funding advisors choose diversification over concentrated positions in particular person altcoins. Bitwise’s product holds ten belongings whereas Grayscale’s incorporates 5 cryptocurrencies in market cap-weighted allocations.
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The framework requires futures contracts to be traded for six months on CFTC-regulated exchanges, with Coinbase Derivatives serving as the first qualifying platform. This outsources asset choice standards to CFTC oversight whereas doubtlessly permitting questionable initiatives into ETF wrappers.
Seyffart questioned whether or not traditional altcoin seasons will materialize as institutional cash drives cryptocurrency efficiency. He noticed:
“I simply don’t see a ton of institutional cash coming into the thirty first ranked crypto.”
Structural shift
Digital asset treasury corporations have absorbed capital that traditionally flowed into altcoins throughout bull markets. Strategy’s monetary engineering permits buyers to acquire leveraged cryptocurrency publicity via traditional fairness markets somewhat than direct token purchases.
Seyffart views present market situations as more and more institutionalized, with refined gamers getting into crypto markets.
This structural shift might completely alter altcoin rally patterns as traditional finance channels present simpler entry to crypto publicity via regulated merchandise somewhat than direct token possession.
Ethereum ETFs exhibit this dynamic, producing substantial inflows after an preliminary sluggish efficiency, however failing to drive widespread momentum in altcoins.
The sample means that institutional preferences favor established belongings over speculative options, whatever the deserves of the underlying blockchain expertise.
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