Fineqia’s Matteo Greco shares insights on crypto ETP trends – ICYMI

Fineqia International Inc (CSE:FNQ, OTC:FNQQF) senior associate Matteo Greco talked with Proactive about the resilience of global exchange-traded product (ETP) assets, which held above $200 billion for the second consecutive month in August.

He explained the recent divergence between Bitcoin and Ethereum products, attributing Ethereum’s record inflows to a temporary market phase rather than a structural shift.

Looking ahead, Greco pointed to potential catalysts in the ETP space. These include the approval of additional crypto assets by the US Securities and Exchange Commission (SEC), which could pave the way for new staking products, as well as the evolution of yield strategies in Europe.

He emphasized that Fineqia is exploring ways to integrate decentralized finance (DeFi) into structured products to create new opportunities for investors.

Proactive: Hello, you’re watching Proactive. I’m joined by Fineqia International Inc senior associate Matteo Greco. Matteo, very good to speak with you. Global ETP assets held above $200 billion for a second month in August. What does this resilience tell us about investor appetite?

Matteo Greco: Hi. First of all, as usual, thanks for having me, it’s always a pleasure to be here. Jumping into your question, I think the main point we can observe is the key difference between crypto-native investors and traditional finance investors who are getting exposure to the asset class through regulated products, because they tend to be much less price sensitive.

We’ve seen in a month like August, where the Bitcoin price went down about 6.5%, that the Bitcoin ETP assets under management almost perfectly matched that decline. There were some small outflows, but almost irrelevant. On the crypto-native side, especially short-term investors, are much more price sensitive and tend to get out quickly when there’s a negative trend.

This reiterates how much more stable the crypto ETP AUM is compared to the native market and definitely brings more stability and positive visibility to the market and the underlying asset class.

Bitcoin ETPs saw small outflows while Ethereum set new records. What’s driving this divergence? And is it structural or temporary?

I would say it’s temporary because we don’t have any signs that Bitcoin is losing its dominance in the market. It’s purely how the market cycles work in the crypto space. We’ve seen Bitcoin dominating both the crypto-native and traditional finance markets for about 2.5 years.

Now in the past couple of months, we’ve had a strong so-called “alt season,” where Bitcoin dominance drops and its price stays relatively flat while altcoins perform better. We’ve seen Ethereum and BNB hitting new all-time highs. This great price performance in altcoins has led investors to increase exposure to them, especially Ethereum over Bitcoin.

But I’d say it’s just a temporary shift typical of the market cycle. Bitcoin’s overall dominance is not in danger.

Ethereum ETPs attracted nearly $10 billion in two months, far outpacing price gains. Why are institutions piling in at this pace?

I feel like we are witnessing in traditional finance what happened in the crypto-native space almost a decade ago when Ethereum started and became the second-largest asset. Bitcoin exposure in traditional finance really became mainstream in January 2024 with the approval of the Bitcoin spot ETF in the US, and from then we had 18 months of Bitcoin dominance.

Now investors are starting to appreciate not only Bitcoin but the broader crypto market. This led to strong investment in Ethereum. The good price performance created demand, and one thing led to another — price gains drove more demand, and investors broadened their exposure. All together, this brought massive inflows into Ethereum-based products.

Altcoin ETPs are up 30% this year, while basket products lag. What does this shift towards single-asset exposure suggest about risk appetite?

It links strongly to what I mentioned before. Ethereum is the leading asset in the altcoin spike. Once Ethereum performs well, we tend to see other altcoins also performing strongly. Ethereum’s performance brought positive externalities to the altcoin sector.

We’ve seen some altcoins performing well and increased demand for structured products focused on altcoins. As a result, during this phase of strong single-asset focus, basket products are lagging compared to previous quarters.

Trends or catalysts — what should we be watching for in the ETP space as we head towards the final quarter of the year?

I’m looking mainly at potential catalysts. In the US, there is a large list of filings by ETP issuers to broaden the range of offerings beyond just Bitcoin and Ethereum spot. This would open the door for new investors to access more digital assets through regulated products.

The second aspect is yield generation. Traditional finance investors are used to dividends and interest rates. In Europe, staking and yield have been available in crypto for some time, but now we are entering a new phase. At Fineqia, for example, we are exploring how to integrate DeFi into structured products.

In the US, we might soon see staking products, especially once more assets are approved. So these two aspects — approvals of more assets and yield strategies — are the main catalysts I’m watching, and they are linked.

Quotes have been lightly edited for clarity and style