Cathie Wood, CEO of ARK Invest, believes that crypto exchange-traded funds (ETFs) are here to stay, even with the increasing adoption of crypto wallets. She argues that many investors prefer the simplicity and convenience of ETFs.
ETFs: Simple, Wallets: Not So Much
While there are reportedly 200 million active Bitcoin wallets globally, US spot Bitcoin ETFs have seen a massive influx of nearly $2.7 billion in new investments in just one week (May 17-23). This suggests that many people find ETFs a more user-friendly option compared to managing their own wallets. The ease of use, coupled with the ability to hold ETFs within existing brokerage accounts, eliminates the need for additional apps and complex security measures like backup phrases.
ETF Growth: A Billion-Dollar Boom
Since their launch in January 2024, US spot Bitcoin ETFs have attracted approximately $44.5 billion. Ether ETFs, launched in July 2024, have also seen significant interest, pulling in around $2.75 billion. However, Ether ETF growth has been slower. This is partly due to the SEC’s current restrictions on staking within these funds, making them less attractive to investors seeking yield.
The Staking Issue: A Hurdle for Ether ETFs
Wood highlights the lack of staking in Ether ETFs as a key factor limiting their appeal. Staking allows users to earn rewards by locking up their coins. Without this feature, Ether ETFs simply hold the tokens, failing to compete with the rewards offered by direct staking within the Ethereum protocol. The SEC’s delay on a decision regarding staking in Bitwise’s Ether ETF further adds to the uncertainty.
Solana’s Setback: A Cautionary Tale
Wood also points to Solana’s recent dip as a potential reason for investor hesitation. The launch of a memecoin associated with Donald Trump on Solana, followed by a significant price drop, might have shaken confidence in the platform’s stability among some investors.
The Future of Crypto: A Cautious Optimism
Wood views crypto ETFs as a valuable “insurance policy” for investors concerned about traditional markets, acting as a bridge for newcomers. She anticipates that many investors will begin their crypto journey with Bitcoin or Ether ETFs before venturing into self-managed wallets to explore more advanced features like smart contracts and other tokens. ARK Invest maintains a bullish outlook on Bitcoin, projecting a price of $2.5 million by 2030. Wood is currently researching her Solana price prediction.
