Joseph Chalom, co-CEO of Sharplink Gaming and former BlackRock executive, has expressed surprise at the strong investor retention in Bitcoin and Ethereum ETFs. More than a year after these exchange-traded funds were launched, investor behavior has shown remarkable resilience, representing a major shift in digital asset management.

Context of the Launch and Evolution of Bitcoin and Ethereum ETFs

Exchange-traded funds (ETFs) based on Bitcoin and Ethereum have marked a milestone in the integration of cryptocurrencies with traditional markets. The participation of BlackRock, one of the world’s largest asset managers, accelerated institutional adoption.

These ETFs provide investors with regulated exposure to digital assets without the need to directly hold cryptocurrencies. However, what stands out to Chalom is the consistent behavior of investors who have maintained long-term positions.

The “Diamond Hands” Phenomenon in BTC and ETH ETFs

The term “diamond hands” refers to investors who hold their assets despite market volatility, avoiding liquidation during downturns. For Chalom, who comes from fast-moving markets, this patience has been unexpected.

• Unlike the usual quick-profit taking, investors in these ETFs show notable retention.
• This pattern reflects growing confidence in the long-term value of Bitcoin and Ethereum.
• It represents a passive investment strategy focused on accumulation rather than speculation.

Implications for the Cryptocurrency Market

Long-term holding in ETFs has significant effects on the crypto ecosystem:
• Price stability: Lower turnover contributes to reduced volatility in BTC and ETH.
• Institutional adoption: The success of these ETFs could encourage the creation of more similar products.
• Ecosystem legitimacy: The inflow of regulated capital strengthens the market’s maturity.
Moreover, this reluctance to sell reflects confidence in the disruptive potential of these technologies in the global financial system.

Regulation and Its Influence on ETF-Based Crypto Investment

Crypto ETFs operate under regulations designed to protect investors and ensure transparency. The approval of such products has been key to attracting institutional capital.
Key regulatory features include:

• Strict custody and audit requirements that increase trust but also raise costs.
• Liquidity and accessibility limitations that help reduce extreme volatility.
• Ongoing oversight that shapes risk perception and encourages conservative strategies.
These factors foster long-term investment aligned with traditional market expectations.

Conclusion

Joseph Chalom highlights a cultural shift in cryptocurrency investing, evident in the strong holding behavior within Bitcoin and Ethereum ETFs. This commitment contributes to greater stability and maturity in the crypto market.

Regulation plays a key role in creating a secure and trustworthy environment, paving the way for broader and sustained institutional adoption in the future.