Podcast Summary: Markets Daily Crypto Roundup

Episode: Crypto Update | Will Litecoin Take the Lead in the 'Wild West' for ETFs?
Host: Jen Senassi
Guest: Cynthia Murphy, Vetify Investment Strategist
Release Date: February 13, 2025

Overview

In this episode of Markets Daily Crypto Roundup, host Jen Senassi engages in a comprehensive discussion with Cynthia Murphy, a seasoned investment strategist from Vetify, focusing on the burgeoning landscape of cryptocurrency Exchange-Traded Funds (ETFs). The conversation delves into the recent surge of ETF filings, the regulatory environment, institutional adoption, and the potential future trajectory of crypto ETFs, with a particular emphasis on Litecoin's prospects in this rapidly evolving market.

The Surge of Crypto ETF Filings

Cynthia Murphy opens the discussion by highlighting the unprecedented influx of ETF applications across various cryptocurrencies. She likens the current scenario to the "wild west" of ETF product development, emphasizing the diversity and volume of filings.

Cynthia Murphy [01:30]: "We're seeing all sorts of filings from everything from Spot Doge, Spot XRP, Spot all these types of cryptocurrencies to also, like, leverage ETFs. And we have had some interesting launches recently that are like downside protection, Bitcoin ETFs. We have stacked ETFs, Bitcoin, and gold. So it is the wild west for ETF product development right now."

Murphy attributes this surge to the high demand and the pioneering nature of spot Bitcoin ETFs, which set a precedent for other cryptocurrencies seeking similar financial instruments.

Institutional Adoption and Due Diligence

Jen Senassi raises a critical point regarding the differing levels of institutional interest in major cryptocurrencies like Bitcoin and Ethereum compared to others like Dogecoin and XRP, which are perceived as more volatile or speculative.

Jen Senassi [02:32]: "We have Bitcoin and Ethereum ETFs as the top two cryptocurrencies by market cap. Some of the tokens that I just listed out there, you know, Doge, a meme coin, XRP, currently in litigation with the SEC. They seem like a different type of product."

Murphy responds by outlining the substantial research and due diligence required for institutions to embrace these financial products. She notes the significant gap in adoption between Bitcoin and Ethereum ETFs versus other cryptocurrencies, attributing it to the longer comfort period institutions have with Bitcoin.

Cynthia Murphy [03:19]: "I think there's a lot of research. If you think about if you just compare the spot Bitcoin ETFs to the spot Ethereum ETFs that came to market last year... the appetite to go down to the next level of due diligence and go figure out a whole new cryptocurrency, that appetite is a lot smaller."

Regulatory Landscape and Predictions

The conversation shifts to the role of regulation, with Jen questioning how the current flurry of ETF products aligns with traditional regulatory processes, especially given the varied nature of the cryptocurrencies involved.

Jen Senassi [03:19]: "How do you see institutions looking at these types of projects? Are they just going to open or is there a little bit more research to be done for their customers?"

Murphy references insights from Bloomberg's James Safer, citing his optimistic probabilities regarding the approval of Litecoin ETFs, while expressing caution about the regulatory pace and its implications.

Cynthia Murphy [05:01]: "He [James Safer] is putting a 90% chance of approval of the Litecoin ETF as the first one and then 70% on DOGE and XRP. So those numbers look good."

She also discusses the surprising trademark filing by TruthFi, a company owned by the Trump family, for launching multiple ETFs, including a Bitcoin strategy, highlighting potential regulatory conflicts of interest.

Cynthia Murphy [06:33]: "If there ever is a rubber stamping on the moment in crypto from a regulatory perspective, instead of a company owned by the President of the United States entering, trying to enter that space, I thought that was loud and clear."

Survey Insights on Institutional Allocation

Murphy shares findings from a joint survey conducted by Vetify and Bitwise, revealing intriguing trends in institutional allocation to crypto ETFs.

Cynthia Murphy [09:30]: "Only a quarter of this channel currently allocates to crypto ETFs. Primarily Bitcoin ETFs. That said, that's twice the growth we've seen in a year that we had seen the previous year."

She emphasizes the growing demand, with 99% of respondents planning to maintain or increase their allocations, driven by client demand. Additionally, a significant 71% prefer accessing cryptocurrencies through ETFs, citing the regulatory framework as a key advantage.

Cynthia Murphy [09:30]: "71% of them said ETFs. So the wrapper brings that regulatory framework that a lot of institutions need in order to access markets that advisors need in order to build portfolios."

Future Outlook and Key Catalysts

As the episode nears its conclusion, Jen inquires about the primary catalysts to monitor in the evolving ETF space.

Cynthia Murphy [11:57]: "This week alone we could get the acknowledgment by the SEC for DOGE and XRP filings. So watch out. By tomorrow, according to predictions, that could happen. I think that would be a huge move to suggest green lights ahead."

Murphy also expresses keen interest in the developments surrounding TruthFi, anticipating how it might influence regulatory perceptions and the broader ETF landscape.

Conclusion

The episode provides a thorough examination of the dynamic and rapidly changing crypto ETF environment. With a surge in ETF filings across diverse cryptocurrencies and a generally positive yet cautious outlook on regulatory approvals, the path forward appears both promising and complex. Institutional interest is growing, driven by client demand and the desire for regulated investment vehicles, though challenges remain in terms of due diligence and regulatory clarity. As the market awaits potential SEC approvals and watches influential players like TruthFi make strategic moves, the future of crypto ETFs remains a pivotal area to watch in the financial landscape.

Notable Quotes:

• Cynthia Murphy [01:30]: "It is the wild west for ETF product development right now."
• Cynthia Murphy [05:01]: "James Safer is putting a 90% chance of approval of the Litecoin ETF as the first one..."
• Cynthia Murphy [09:30]: "Only a quarter of this channel currently allocates to crypto ETFs... 71% of them said ETFs."
• Cynthia Murphy [11:57]: "We could get the acknowledgment by the SEC for DOGE and XRP filings by tomorrow."

This detailed summary encapsulates the critical discussions, insights, and forward-looking statements made during the episode, providing a comprehensive understanding for listeners and non-listeners alike.