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The cryptocurrency market continues to develop.
Incredibly, Bitcoin ( BTC-USD ) is now 15 years old; The original cryptocurrency appeared in 2009. As the industry evolves, changes inevitably occur.
A great strategy for investing in cryptocurrency this year is to attract institutional capital. With the advent of exchange-traded funds (ETFs), large financial companies can now invest securely in Bitcoin with the click of a button. ETFs allow individual investors to easily access the Bitcoin market from a tax-sheltered retirement account. This change opens up new horizons for digital assets.
Cryptocurrency to buy: Bitcoin (BTC-USD)
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Earlier this month, the Securities and Exchange Commission (SEC) dramatically changed the rules of the cryptocurrency game. On January 11, the Securities and Exchange Commission (SEC) approved trading in 11 different Bitcoin ETFs. These include funds such as the iShares Bitcoin Trust (NASDAQ: IBIT ) and the Invesco Galaxy Bitcoin ETF (NYSE: BTCO ), which have attracted large amounts of investor capital since their launch a few weeks ago.
Until January 2024, investors had very limited access to Bitcoin on US exchanges. Grayscale Bitcoin Trust (NYSEARCA: GBTC ) operates as a trust, but can only trade pink notes. The SEC previously blocked Grayscale's application to become an ETF.
However, Grayscale has now managed to convert to an ETF, and this fund conversion has led to the adoption of all other digital asset ETFs. Since Bitcoin is the oldest and most popular cryptocurrency, it will attract the most new capital to the industry.
Cryptocurrency for purchase: Ethereum (ETH-USD)
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Ethereum ( ETH-USD ) will be the next cryptocurrency to benefit from this trend. The SEC is expected to make a decision on whether to approve the ETF later this spring. Some analysts expect this to lead to a significant increase in the price of ETH.
Bears may argue that cryptocurrency prices initially fell following the approval of the Bitcoin ETF, which is true. However, in this case, the Grayscale Bitcoin fund already had a significant amount of capital, and after the ETF was approved, a significant portion of the funds from this GBTC product were transferred to other funds with lower expense ratios.
Once this shift is largely resolved, future flows into Bitcoin ETFs should be a net positive for the ecosystem and support higher prices. However, there is not much money in Ethereum funds; ETFs will benefit from market volatility that could lead to a significant rally later this year.
Cryptocurrency for sale: FLOKI Inu (FLOKI-USD)
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Another aspect of cryptocurrency investment strategy focuses on capturing institutional capital flows.
The entry of big-name asset managers like BlackRock (NYSE: BLK ) into the ETF space means that cryptocurrency is now becoming a more serious endeavor. By attracting more professional investors to the category, the digital asset landscape is changing.
We've already seen the decline in popularity of the more speculative parts of the cryptocurrency scene, such as non-fungible tokens (NFTs). Memes may be another loser in this transition.
Take Floki-inu ( FLOKI-USD ) for example. The coin is one of many tokens that have emerged as a result of the popularity of Dogecoin ( DOGE-USD ). However, due to Floki Inu's high transaction fees, limited visibility, and minimal utility, it appears that Floki Inu does not have a promising future.
During the days of cryptocurrencies in the Wild West, only meme currencies with the support of social networks could be extremely popular. However, with the advent of ETFs and institutional cryptocurrencies, unproven exotics like Floki Inu will likely fall by the wayside as smart money focuses on promising tokens and projects.
As of the date of publication, Jan Basic does not have any position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com's publishing guidelines.
Jan Bizek has written over 1,000 articles for InvestorPlace.com and Looking for Alpha. He also worked as an associate analyst at Kerrisdale Capital, a $300 million hedge fund based in New York. You can contact him on Twitter @irbezek.
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