Wall Street Prepares for the Era of Crypto-Linked ETFs

Sentiment status: Positive

Donald Trump's return to the White House is fueling the rise of speculative products tied to the crypto world, valued at approximately $3.2 trillion.

Donald Trump, 45th President of the United States, was a key speaker at the Bitcoin 2024 Conference. Trump’s advocacy for the American Bitcoin industry and his commitment to financial freedom positioned him as a central figure in the event.

With a cryptocurrency-friendly president returning to the White House, Wall Street is ready to unleash a new generation of speculative products in this $3.2 trillion sector to satisfy investors of all kinds.

Since the election, a wave of exchange-traded funds (ETFs) linked to Bitcoin, which simply track the cryptocurrency, has attracted billions in demand. As Donald Trump's second presidency, a proponent of digital assets, approaches, ETF executives and attorneys say they are devising strategies to cater to every preference. These range from defensive ETFs for professional money managers eager to embrace cryptocurrencies to those targeting "degens" (short for degenerates) referring to individuals engaging in highly speculative and risky trading activities.

Wall Street Gears Up for Crypto-Linked ETFs

According to investors and industry attorneys, riskier cryptocurrency ETFs could focus on a wide array of digital tokens, sometimes employing leverage, options, or quantitative strategies. They anticipate that these new products will receive a warmer reception from the U.S. Securities and Exchange Commission (SEC) under Trump's administration than they did under President Joe Biden.

"The ETF industry is entering a 'Wild West' era under the likely new SEC leadership, with increasingly complex crypto-linked, leveraged, and inverse ETFs poised to lead the charge," said Aisha Hunt, head of the law firm Kelley Hunt, which specializes in ETFs.

Financial startups are thriving, catering to a growing pool of institutional managers and an ever-diverse generation of retail traders. More conservative retail investors have flooded social media channels this year to debate applying traditional investment principles, like cash flow analysis, to high-risk instruments, including cryptocurrencies and leveraged tech exposures.

At the same time, boastful players are reveling in Trump's victory, flaunting their newfound crypto wealth on social media with sports cars and luxury watches. This behavior suggests significant growth potential across the digital asset ecosystem, fueling a Bitcoin price surge of over 40% since the election.