By Mark DeCambre
Hello there! The Invesco QQQ Trust /zigman2/quotes/208575548/composite QQQ +0.38% is up over 2% so far this week. That is not where many investors would have bet that the popular exchange-traded fund would be trading now based on the wild action midday Monday .
In fact, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.13% /zigman2/quotes/208954582/composite DIA +0.14% , the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.11% /zigman2/quotes/209901640/composite SPY +0.18% and the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.16% /zigman2/quotes/210598364/realtime NDX +0.30% are looking at weekly gains that seemed unlikely early Monday. But that is how quickly the worm can turn and this year may be about regime change, value versus growth and inflation versus deflation. Who will come out on top?
It is anyone’s guess but it seems that many of those bets are being expressed through ETFs of late, after a bumper year for the market segment .
In any case, Benchmark Investments CEO Kevin Kelly tells ETF Wrap that bitcoin is the past and Ether is the future of funds.
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|Top 5 gainers of the past week||%Performance|
|KraneShares CSI China Internet ETF /zigman2/quotes/205873167/composite KWEB||14.0|
|VanEck Oil Services ETF /zigman2/quotes/207596637/composite OIH||8.7|
|Emerging Markets Internet & Ecommerce ETF /zigman2/quotes/205406984/composite EMQQ||7.4|
|iShares China Large-Cap ETF /zigman2/quotes/208670743/composite FXI||7.3|
|SPDR S&P Oil & Gas Exploration & Production ETF /zigman2/quotes/203527521/composite XOP||7.0|
|Source: FactSet, through Wednesday, Jan. 12, excluding ETNs and leveraged products . Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greate r|
…and the bad
|Top 5 decliners of the past week||%Performance|
|KraneShares Global Carbon Strategy ETF /zigman2/quotes/219806069/composite KRBN||-6.4|
|Global X Robotics & Artificial Intelligence ETF /zigman2/quotes/205896633/composite BOTZ||-3.4|
|iShares U.S. Home Construction ETF /zigman2/quotes/203468436/composite ITB||-3.2|
|NorthShore Global Uranium Mining ETF /zigman2/quotes/215396693/composite URNM||-3.1|
|Global X Uranium ETF /zigman2/quotes/201570425/composite URA||-2.7|
Forget about bitcoin /zigman2/quotes/31322028/realtime BTCUSD -2.89% /zigman2/quotes/211755589/delayed BTC.1 -0.43% , says Benchmark’s Kelly. The real digital asset to focus on is Ether /zigman2/quotes/108573964/realtime ETHUSD -3.18% on the Ethereum network. We caught up with Kelly on Thursday and he said the world’s No. 2 asset behind bitcoin is likely to surpass its much larger sister asset because smart-contract networks like Ether provide more utility than bitcoin, which is seen as a store of value. Kelly said that he envisions a time in the not-so-distant future when Ether is the dominant crypto surpassing bitcoin’s current $819 billion total value, according to CoinMarketCap.com. Ether’s total value stands at $393 billion, putting it just less than half of bitcoin.
If Ethereum’s market value overtakes that of bitcoin, then “the flippening” will have happened, which is the term that crypto enthusiasts use to refer to that shift, according to a post at the Flippening Watch blog . The closest Ether has gotten is when a narrowing of values in 2017 but since then it has struggled to challenge bitcoin.
“We absolutely believe that a flippening can happen this year,” Kelly told MarketWatch.
“We believe that as the digitazation of the world continues to happen, Ethereum is the network for that, Kelly said.
Kelly says that the growth of private blockchains, nonfungible tokens, or NFTs, the emergence of decentralized finance, or DeFi, among other factors are making Ether, which tends to power all of those, the asset to beat.
“So over the next one, three, five years, we believe that the growth in blockchain applications will be unprecedented and Ether will absolutely have its role in that,” he continued.
That has implications for the ETF world, which has been fixated on a bitcoin spot ETF after the ProShares Bitcoin Strategy ETF /zigman2/quotes/230440344/composite BITO -0.74% was launched last October to much fanfare. Kelly speculated that an explosion of Ether-based ETFs might come good down the road. He recently withdrew his own filing with regulators for an Ether futures ETF, with the Securities and Exchange Commission intimating that they would rather digest the recent batch of bitcoin futures offerings first.
Kelly predicts that an Ether futures ETF could happen this year, in a bull case but sees his base case as next year.
“I believe the bull case [for an Ether-linnked ETF] is 2022 and the base case is 2023 and the bearish case is 2024,” he said.
Meanwhile, the ETF expert has rolled out a trio of more traditional ETFs listed on NYSE’s Arca platform.