In a recent interview with the Insider, the cryptocurrency-focused portfolio strategist Amy Arnott shared her opinions on ethereum, Cardano, and crypto regulation in general. The strategist Arnott states that it is difficult to agree on a suitable price for cryptocurrencies since many of them are not cash-generating assets, which can further cause volatility. Nevertheless, ethereum has a different character, as Arnott explains. Since ethereum is used to support non-fungible tokens (NFTs) and to perform decentralized finance (DeFi) transactions, it has an in-built price to a certain extent. This unique character has led some analysts to refer to it as “digital oil” or “digital gas.”

Arnott elaborated:

“The fact that ether is used as a utility should provide some price floor, but I’m not sure what that should be. Many people talk about a network effect where these currencies become more valuable as they are used more and there are more interdependencies and connections.”

According to Arnott, Cardano, abbreviated as ADA, is a profitable altcoin and could join ethereum and bitcoin to form the “big three” of the cryptocurrency world. The open-source cryptocurrency was created by Charles Hoskinson, the co-founder of ethereum. She further explained:

“Cardano is similar to ethereum in that it’s a protocol that has a lot of potential technical applications. So there’s a lot of enthusiasm about Cardano and various stablecoins.”

Cardano aims to be implemented in the decentralized finance services within this year, like ethereum. As a result, its price climbed from $0.18 to $1.16 in 2021, equal to a 544% increase!

The portfolio strategist at Morningstar also talked about the institutional adoption of cryptocurrencies: “The interesting thing that’s happened over the past year or so is that institutional investors have been far more willing to adopt cryptocurrencies and look at them as an investment asset. As that trend continues, we’ll see other cryptocurrencies become more mainstream.”

Arnott expressed her wish for a diversified cryptocurrency index fund used as an exchange-traded fund (ETF). However, no crypto ETF has been approved by the US Securities and Exchange Commission (SEC). It makes it “very difficult for mainstream investors to gain exposure to cryptocurrencies.” Arnott elaborated:

“Regulatory risk is a big issue – that’s been the driving factor behind a lot of the volatility over the past few months. If governments around the world clamp down on crypto in general, or bitcoin and ether specifically, that would be a large negative.”

A crypto ETF might be a way to reduce potential volatility and attract traditional investors. Amy Arnott, the cryptocurrency-focused strategist at Morningstar, thinks that currently there is “a lot of internal debate at the SEC about whether they should go ahead with this – it’s an important trend and a lot of investors need to have access to it, but they do need to protect investors.” Although this trend is still a little way off, Arnott thinks it is precisely where the cryptocurrency world needs to put effort.