Crypto ETF Flows Reveal Bitcoin Dominance

What to Know:

• Bitwise filed for an ETF covering eleven altcoins, notably excluding Cardano (ADA).
• The filing arrives amid growing institutional interest in diverse crypto assets beyond Bitcoin and Ethereum.
• The omission of Cardano may signal concerns around its market demand or regulatory outlook, impacting potential institutional inflows.

Asset manager Bitwise is expanding its crypto ETF offerings with a new filing for a fund tracking eleven distinct altcoins. The move underscores the increasing appetite for diversified crypto exposure among institutional investors. However, the exclusion of Cardano from the list has sparked debate and speculation within the crypto community, raising questions about its appeal to larger financial players.

Altcoin Basket Composition

The proposed ETF seeks to provide exposure to a range of altcoins, including Tron (TRX), Ethena (ENA), Zcash (ZEC), AAVE, Hyperliquid (HYPE), SUI, Bittensor (TAO), Uniswap (UNI), NEAR, Canton (CC), and Starknet (STRK). This selection represents a mix of layer-1 protocols, decentralized finance (DeFi) tokens, and privacy coins, reflecting the diverse landscape of the crypto market. The absence of Cardano, currently a top-ten cryptocurrency by market capitalization, is a notable deviation.

Cardano’s Exclusion: A Deliberate Snub?

The crypto community has reacted to Cardano’s omission, with some suggesting it represents a deliberate snub by Bitwise. Some observers believe that Cardano’s emphasis on decentralization and research-driven development may not align with the priorities of certain institutional players. Others point to potential concerns about regulatory clarity or long-term adoption as possible factors influencing the decision.

Existing Cardano Exposure via Index Funds

Currently, Bitwise clients can gain limited exposure to Cardano through the Bitwise 10 Crypto Index ETF (BITW), which tracks the top ten cryptocurrencies by market capitalization. However, ADA’s weighting in this fund is relatively small at just 0.52%, with the majority of the fund’s assets allocated to Bitcoin and Ethereum. This indirect exposure may not satisfy investors seeking a more targeted allocation to Cardano.

Community Debate and Market Sentiment

The exclusion of Cardano has ignited a debate within the crypto community. Some argue that it reflects a lack of demand for ADA among institutional investors, while others suggest it could be related to concerns about the token’s use case or transaction fees. Regardless of the underlying reasons, the decision highlights the ongoing scrutiny and selective adoption of altcoins by institutional players.

ETF Structure and Strategy

Bitwise intends for the new altcoin ETF to trade on the NYSE Arca exchange, providing both direct and indirect exposure to the underlying coins. The fund’s strategy involves allocating 60% of its assets under management to purchasing the underlying coins, with the remaining 40% allocated to other ETFs and derivative products. This approach aims to provide diversified exposure while also potentially enhancing returns through active management.

Bitwise’s continued push into crypto-related investment products reflects its bullish outlook on the sector’s long-term growth potential. While the exclusion of Cardano from this particular ETF has raised eyebrows, it underscores the selective and evolving nature of institutional adoption within the crypto market.

Related: XRP Signals Surge as Bitcoin Dominance Plunges

Source: Original article