Pantera Capital Eyes Potential $100M Investment In Bitwise's Spot Ethereum ETF

Pantera Capital is contemplating a substantial investment of up to $100 million in Bitwise's spot Ethereum ETH/USD ETF, pending regulatory approval for the fund’s launch.

What Happened: Bitwise’s recent amendment to their S-1 filing on June 18 indicates that Pantera has “expressed interest” in acquiring shares, CryptoSlate reported.

The firm plans to purchase these shares from authorized participants or broker-dealers via its affiliated investment funds.

However, if Pantera or its affiliates follow through on this investment, they will be restricted from selling the shares on the open market for six months.

They will only be able to dispose of them through a redemption transaction with authorized participants.

It's important to note that Pantera has not committed to a definitive agreement or set the investment amount in stone.

The actual investment could vary, potentially being more, less or even non-existent.

Pantera's Optimism for Ethereum ETF

In a June 18 letter to investors, Pantera Capital CEO Dan Morehead and his team highlighted the potential appeal of spot Ethereum ETFs to a new wave of investors who have been previously sidelined due to compliance issues or brokerage limitations.

They believe Ethereum, with its reputation as a “tech platform,” might attract more investor interest and be easier to understand than Bitcoin BTC/USD, often seen as “digital gold.”

The firm also noted that despite Ethereum's underperformance over the past year and a half, this might position it as a “strong catchup trade candidate.”

Pantera suggested that the ETFs could offer a “surprising upside” due to low expectations around investment flows but acknowledged the risk of significant outflows.

Pantera pointed out that Grayscale's ETHE fund might experience outflows when it transitions to an ETF, although these outflows could be “less material” compared to early GBTC outflows, which were driven by forced sellers like Three Arrows Capital (3AC) and Genesis, who faced bankruptcy in 2022 and 2023, respectively.

Also Read: Dogecoin’s 10% Dump Liquidates $60M In Long Bets

Broader Implications and Market Impact

Pantera also discussed potential broader “knock-on effects” of spot ETH ETF approvals, including market growth and diversification.

The firm stated, “Increased attention on ETH may spill over to the broader universe of protocols as investors explore Ethereum as a technology platform.”

Furthermore, Pantera suggested that ETH ETF approvals could lead to greater integration with mainstream financial products, making blockchain “just another asset class” managed by registered investment advisors (RIAs) alongside thousands of existing securities.

The firm speculated that these approvals might pave the way for spot ETFs for other crypto tokens, echoing sentiments from executives at JP Morgan, Bernstein and Cboe, who have shown varying levels of optimism about the future of crypto ETFs.

What’s Next: For those interested in the evolving landscape of digital assets, don’t miss Benzinga’s Future of Digital Assets event on Nov. 19, where industry leaders will discuss these developments and more.

Read Next: Inside Elon Musk’s Plan To Add Payments To X

Image: Shutterstock