Following in the footsteps of bitcoin and ethereum spot ETFs, some enthusiasts believe Dogecoin, Ripple and Litecoin could be next. Reuters
Amid a global economic slowdown and geopolitical risks, cryptocurrencies are making a comeback and are ranked as one of the world's best-performing assets for the first seven months of 2024, along with Nvidia, one of the US Stock Exchange's “Magnificent Seven” tech stocks.
Among cryptocurrencies, Binance Coin (BNB), which can be used for trading on the Binance Exchange and to pay fees, is expected to have the highest return in 2024 at 89.6% as of July 22, followed by Bitcoin at 51.0% and Ethereum at 47.5%.
Other top performers included the Nasdaq 100 at 19.8%, gold at 16.4%, MSCI World at 14%, oil at 13.4%, MSCI Asia at 8.21%, MSCI Emerging Markets at 6.80% and coal at 5.68%.
Cryptocurrencies have received some regulatory support this year, starting with the U.S. Securities and Exchange Commission (SEC) approving the first spot bitcoin exchange-traded fund (ETF) in January.
On May 24, the SEC approved the creation of the Spot Ethereum ETF (ETH ETF) and registered units for trading on U.S. stock exchanges, allowing institutional investors with strong purchasing power to invest in the asset.
As a result, the total market capitalization of cryptocurrencies has grown from around $1 trillion in mid-October last year to around $2.5 trillion as of July 3.
Kavita Gupta, founder and partner at Delta Blockchain Fund, said the launch of a Spot ETH ETF could have a big impact on other altcoins.
“The launch of an ETH ETF would be a major development for the space and could spark the next altcoin rally despite Bitcoin's dominance so far,” she said.
Crypto enthusiasts expect that four more coins may be approved for the spot ETF, which could attract institutional investors to further invest in the crypto market later this year.
BNB Utilities
Issued by the Binance exchange, BNB was created in 2017 as a utility token to offer discounts on trading fees and has since expanded to numerous applications on various platforms. It is used to pay trading fees on Binance.com, Binance DEX and Binance Chain.
BNB can also be used to make payments on Monetha and HTC, book accommodation on sites like TravelbyBit, Trip.io and Travala.com, buy music and gaming rewards, pay for online services on BitTorrent, Canva and Storm, take out loans on ETHLend and invest on Moeda.
Every quarter, Binance uses one-fifth of its profits to buy back and permanently destroy, or “burn,” the BNB held in its treasury.
At the time of writing, BNB’s market capitalization is over $87 billion, placing it behind Bitcoin, Ethereum, and USD Tether.
Sanjay Potpourri, CEO of CryptoMind Advisory and co-founder of CryptoMind Group Holdings, said BNB has long been a popular coin, but over the past few years some investors have been concerned about the extent to which the Binance exchange and the BNB coin would be affected by a U.S. SEC investigation.
The former CEO of cryptocurrency exchange Binance, Changpeng Zhao, pleaded guilty to violating U.S. money laundering laws and was sentenced to four months in prison by a U.S. court on April 30.
Zhao is due to be released this month. Though he is no longer an executive at Binance, he remains a key figure behind the scenes, guiding investors to speculate on the price of BNB, Potpourri said.
The BNB coin may also benefit from Binance Launchpad, Binance’s dedicated token launch platform that helps blockchain startups raise capital for new projects.
When the cryptocurrency market is active, many new coins are expected to be listed on the Binance platform, and investors prefer to hold BNB coin because they can receive free coins from the launch pool depending on the conditions, he said.
Outlook for the second half
Potpourri said some interesting coins for the second half of the year include NEAR Protocol, which offers backups related to artificial intelligence (AI) technology.
He also mentioned Render, a distributed graphics processing unit rendering network that runs on the Ethereum blockchain.
Popourri said WorldCoin is designed to be the world's largest privacy-preserving human identity and financial network, giving ownership to everyone.
Solana is a blockchain platform designed to host decentralized, scalable applications, and the meme coin is another interesting development this year, he said.
The Potential of Spot ETFs
According to Bitkub Academy, part of Thailand’s leading cryptocurrency exchange, there are four coins that could be approved as the next spot ETF after Bitcoin and Ethereum.
Coming in at number one is Solana, which according to the academy ranks fourth in the crypto market due to its high market capitalization, liquidity and reliability.
The SEC recently decided to abandon efforts to have a court decide whether 10 crypto assets, including Solana and Cardano, should be designated as securities in its lawsuit against Binance, a move that supports Solana's eventual recognition, Bitkub Academy said.
Regulators accused Binance of violating federal securities regulations in June 2023, and the complaint included various tokens listed on Binance.
These tokens include Cardano, Solana, The Sandbox, Polygon, and Axie Infinity. Other tokens that are classified as securities in this context include Binance USD, Binance Coin, Decentraland, Coti, and Cosmos.
Another coin that could potentially be accepted into the Spot ETF is Ripple (XRP), which ranks fifth by market cap.
Like Solana, the SEC accused Ripple and its executives of raising more than $1.3 billion through unregistered asset offerings of the XRP token.
Ripple recently expressed confidence that the judge would take a “fair approach” and that legal clarity regarding XRP “will remain.”
Litecoin has been on the market for a long time. It is considered similar to Bitcoin because it uses a Proof-of-Stake (PoS) mechanism for processing transactions. It is a decentralized mechanism that is considered secure against attacks. However, the market capitalization of this coin is low.
The final option is Dogecoin (DOGE), which was created for fun as an internet meme, according to Bitkub Academy.
DOGE is considered similar to Bitcoin as it uses a PoS mechanism. It also has a high market capitalization, ranking 6th in the cryptocurrency market. According to the Academy, the coin has decentralization of coin owners and very good decentralization properties.
Curb your optimism
Robert Mitchnick, head of digital assets at BlackRock, the world's largest asset manager, said there won't be a “long list of crypto ETFs.”
Despite the recent launch of a spot ETH ETF, this is unlikely to open the door to funds tracking other crypto assets such as Solana or Polygon, he said.
“I don’t think we’ll see a long list of crypto ETFs,” Mitchnick said in conversation with Bloomberg Intelligence ETF analyst James Seifert at the Bitcoin 2024 conference.
“If you think about Bitcoin, right now it's about 55% of the market cap. ETH is at 18%. The next most considered investable asset is at 3%. It's just nowhere near that threshold or track record in terms of maturity, liquidity, etc.”
That said, it is “increasingly clear” that cryptocurrencies as an asset class “are not going away,” which will likely create opportunities for firms like BlackRock to get even more involved in the market.
For example, rival VanEck recently applied to launch a Solana ETF, but analysts say it is unlikely to be approved.
Mitchnick said that while there isn't “total clarity” from regulators, the SEC has made it clear that it wants to draw the line somewhere. For example, he said, regulators are unlikely to approve a spot ETH ETF with staking elements.
BlackRock filed to launch a Bitcoin ETF in June 2023 and is widely credited with reigniting interest in launching a spot Bitcoin ETF.
For more than a decade, the SEC has been reluctant to approve such investment products, citing potential market manipulation and oversight concerns.
Mitchnick said that this changed because the iShares Bitcoin ETF application included a market observation agreement that addressed these risks.
Bullish outlook
The price of Bitcoin rose over 11% in July, finishing the month at over $67,700. The price of ETH fell 3.4% in July, finishing the month at $3,272.
Among the top 10 cryptocurrencies by market capitalization, Ripple performed the best in July, recording a 26.9% increase.
TonCoin has been the worst performer this month, but is up 21.5% overall over the past three months.
Earlier this month, the price of Bitcoin dipped below $60,000 as risk aversion in global markets is said to have led the digital asset to its biggest weekly loss since the collapse of the FTX exchange in 2022.
The drop came amid a global stock sell-off, reflecting concerns about the economic outlook and questions about whether heavy investments in AI will live up to the hype around the technology.
Geopolitical tensions are also rising in the Middle East, adding to investor anxiety.
Investors are feeling optimistic after reports that Morgan Stanley will give thousands of financial advisors permission as early as next week to solicit eligible clients to buy a physical bitcoin ETF, according to a person familiar with the matter.
As previously reported by CNBC, the firm told a group of 15,000 advisors in a memo that they could offer some clients the opportunity to buy either BlackRock's iShares Bitcoin Trust or the FidelityWise Origin Bitcoin Fund.
Morgan Stanley's decision may pave the way for other banks that have been reluctant to offer digital assets to consider entering the space, the report noted.
The industry is also hoping that the upcoming U.S. presidential election will steer a more crypto-friendly White House, with former president and 2024 Republican candidate Donald Trump, once a critic of the industry, now a cheerleader for Bitcoin.
Democratic Vice President Kamala Harris has not announced a digital asset policy.
“Obviously, a Republican administration could be more bullish for crypto in general, which would be a great thing,” said Nick Roberts Huntley, CEO of crypto startup Concrete.
