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Crypto ETFs Face First Major Test Amidst Market Sell-Off
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Bitcoin and ether rebounded after a sharp decline. Over $370 billion was wiped out from cryptocurrency market caps in just one day. Bitcoin fell below $50,000, and ether experienced its steepest drop in three years.
The sell-off reflected a broader slump in the stock market. New spot cryptocurrency ETFs, introduced this year, have increased exposure to crypto volatility for more investors. Despite the downturn, ETF holders largely remained invested. Bitcoin ETFs saw outflows of $168 million, a minor portion of their $50 billion market cap. Ether ETFs, however, attracted over $48 million.
Analysts at Bernstein emphasize the liquidity of bitcoin ETFs, which trade around $2 billion daily. They anticipate further approvals in the third and fourth quarters, which could enhance bitcoin investment.
Morgan Stanley plans to allow its advisors to recommend BlackRock and Fidelity's spot bitcoin ETFs to high-net-worth clients. This move could encourage more firms to do the same, driven by market demand.
Jenny Johnson, CEO of Franklin Templeton, expects larger institutions to participate once they are comfortable with the settlement processes. Bernstein analysts predict that cryptocurrency will respond to macroeconomic and election events in the third quarter.
Barclays points out that ETF trading volumes remain lower than those on cryptocurrency exchanges.
| Scores | Value | Explanation |
|---|---|---|
| Objectivity | 6 | Comprehensive reporting and in-depth analysis. |
| Social Impact | 4 | Strong social discussion, influencing some public opinion. |
| Credibility | 5 | Solid evidence from authoritative sources. |
| Potential | 5 | Very high potential to trigger larger events. |
| Practicality | 4 | Highly practical, applicable to real problems. |
| Entertainment Value | 3 | Some entertainment value, attracts a portion of the audience. |