Pantera Capital is interested in potentially investing $100 million in Bitwise‘s spot Ethereum (ETH) ETF as seed capital if the funds are approved to launch.
Bitwise’s June 18 S-1 amendment states that Pantera has “indicated an interest” in purchasing shares. Pantera would purchase the shares from authorized participants or broker-dealers in the market through at least one of its affiliated investment funds.
If Pantera or its affiliates proceed with the purchase under the indication of interest, they cannot sell the shares in an open-market sale for six months. However, they can dispose of the shares in a redemption transaction with authorized participants.
Pantera has not entered a binding agreement or committed to a purchase. It could invest more or less than $100 million or nothing at all.
Pantera optimistic on Ethereum ETF
In a June 18 letter to investors, Pantera Capital CEO Dan Morehead and other staff wrote that spot Ethereum ETFs could attract “a substantial influx of new investors” previously excluded due to compliance reasons or brokerage account limitations.
The firm believes that some investors may be more interested in and better able to comprehend Ethereum’s reputation as a “tech platform” compared to Bitcoin’s status as “digital gold.”
The firm also acknowledged arguments that Ethereum has underperformed over the past year and a half, which could make the asset a “strong catchup trade candidate.”
Pantera added that the ETFs could carry a “surprising upside” due to low expectations around flows but acknowledged the possibility of significant outflows.
The firm noted that Grayscale’s ETHE fund could see outflows when it begins trading as an ETF. However, the outflows could be “less material” than early Grayscale GBTC outflows due to fewer forced sellers.
Pantera named Three Arrows Capital (3AC) and Genesis, which entered bankruptcy in 2022 and 2023, respectively, as forced sellers who had to offload their GBTC holdings.
Knock-on effects
Finally, Pantera said spot ETH ETF approvals could have broader “knock-on effects,” including market growth and diversification benefits. According to the firm:
“Increased attention on ETH may spill over to the broader universe of protocols as investors explore Ethereum as a technology platform.”
It added that ETH approvals could lead to greater integration with mainstream financial products, making blockchain “just another asset class” alongside thousands of other existing securities handled by registered investment advisors (RIA).
Pantera also suggested that the latest approvals could lead to spot ETFs for other crypto tokens. Executives at JP Morgan, Bernstein, and Cboe have similarly discussed the possibility of other crypto ETFs, expressing varying levels of optimism.
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