While the prospect of a bitcoin spot ETF entering the U.S. market remains uncertain, industry watchers say it could be one of the largest ETFs ever if approved by the U.S. SEC.
A bitcoin spot ETF could spur investors to carve out billions of dollars from Grayscale’s Bitcoin Trust (GBTC), the Canadian Bitcoin ETF and other crypto products.
Bloomberg Intelligence analyst James Seyffart said on the ETF Prime podcast on July 5, hosted by The ETF Store president Nate Geraci, that the bitcoin spot ETF is "probably one of the largest ETFs ever launched."
Seyffart said the ProShares Bitcoin Strategy ETF (BITO) is one of the most successful ETFs out there. The fund, which launched in October 2021 and holds bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), grew to more than $1 billion in assets under management in its first two days.
But James Butterfill, director of research at CoinShares, said a physical-backed ETF meets more due diligence requirements than BITO because it provides bankruptcy protection for fund issuers and closely tracks bitcoin prices. It is therefore reasonable to expect that demand for bitcoin spot ETFs will increase significantly, especially if launched by an asset management giant such as BlackRock.
Butterfill said: "There are quite a few clients who are waiting for competitors to get involved first in Bitcoin to avoid the reputational damage of being cannon fodder. If BlackRock launches an ETF, it may eliminate a lot of negative words related to cryptocurrencies, which may would generate significantly higher early-stage investment inflows than what Proshares will see in 2021."
**GBTC asset restructuring? **
Assets in crypto investment products hit $37 billion last week, the highest level since June 2022, according to CoinShares data.
These assets may be reshuffled after one or more bitcoin spot ETFs are approved.
Seyffart said: “There are U.S. funds in these Canadian ETFs. If the Bitcoin spot ETF is approved, the U.S. funds in other fields may flow back, not to mention Grayscale and GBTC, and funds will also be funneled into the Bitcoin spot ETF.”
If approved, investors in the trust could seek to sell their GBTC shares and reinvest them in a bitcoin spot ETF, Dave Nadig, a financier at data firm VettaFi, said on the ETF Prime podcast.
Dave Nadig said: "There is $20 billion trapped in a completely collapsed pink sheet trust fund GBTC. I think half of the funds will appear in the bitcoin spot ETF within two weeks."
Geraci believes that the bitcoin spot ETF will initially generate a lot of interest, noting that its launch could “break” the previous trading highs set by other successful ETFs such as BITO.
Geraci said: "There is a lot of pent-up demand here, so that financial advisors and even institutional investors can obtain Bitcoin through traditional financial services channels, and ETF will become a bridge between the traditional financial world and cryptocurrencies."
An April 2022 Nasdaq survey found that 72% of financial advisors would be likely to invest client assets in cryptocurrencies if spot bitcoin ETFs were available in the United States.
According to a January report by Bitwise and VettaFi, 32 percent of financial professionals cite the “lack of easily accessible investment vehicles such as ETFs and mutual funds” as a barrier to deploying cryptocurrencies.
**Approve all at once? Which can be the biggest winner? **
Seyffart noted that there are currently eight active bitcoin spot ETF applications. Additionally, podcast participants pointed out that other firms such as Global X, First Trust, and Charles Schwab may also want to launch their own bitcoin spot ETFs.
Seyffart said the SEC should approve the applications at the same time, but noted that letting BlackRock launch first would be a "very bad decision."
Nadig said that if multiple bitcoin spot ETFs can be listed at the same time, factors such as the brand of the applicant, the depth of the capital market, and the number of institutions may be critical.
For example, Nadig proposed a scenario where BlackRock, Valkyrie and Bitwise launch on the same day. So which one was able to get the most volume in the first four days? Nadig thinks it will be BlackRock, because BlackRock has these deep connections.
But Butterfill said that if the expected large number of bitcoin spot ETFs were issued, it could "dilute" the asset attraction potential of each bitcoin spot ETF.
Nadig said exchanges including Nasdaq, the New York Stock Exchange or the Chicago Board Options Exchange could potentially earn more than the fund’s issuer after the bitcoin spot ETF goes public. Because exchanges are primarily compensated based on trading volume rather than assets, even if the fund is only $1 billion at launch, it could still be one of the most traded ETFs ever for an exchange.
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Analysis: If the Bitcoin spot ETF is approved, it may be the largest ETF in history
By Ben Strack, Blockworks
Compiled by: Felix, PANews
While the prospect of a bitcoin spot ETF entering the U.S. market remains uncertain, industry watchers say it could be one of the largest ETFs ever if approved by the U.S. SEC.
A bitcoin spot ETF could spur investors to carve out billions of dollars from Grayscale’s Bitcoin Trust (GBTC), the Canadian Bitcoin ETF and other crypto products.
Bloomberg Intelligence analyst James Seyffart said on the ETF Prime podcast on July 5, hosted by The ETF Store president Nate Geraci, that the bitcoin spot ETF is "probably one of the largest ETFs ever launched."
Seyffart said the ProShares Bitcoin Strategy ETF (BITO) is one of the most successful ETFs out there. The fund, which launched in October 2021 and holds bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), grew to more than $1 billion in assets under management in its first two days.
But James Butterfill, director of research at CoinShares, said a physical-backed ETF meets more due diligence requirements than BITO because it provides bankruptcy protection for fund issuers and closely tracks bitcoin prices. It is therefore reasonable to expect that demand for bitcoin spot ETFs will increase significantly, especially if launched by an asset management giant such as BlackRock.
Butterfill said: "There are quite a few clients who are waiting for competitors to get involved first in Bitcoin to avoid the reputational damage of being cannon fodder. If BlackRock launches an ETF, it may eliminate a lot of negative words related to cryptocurrencies, which may would generate significantly higher early-stage investment inflows than what Proshares will see in 2021."
**GBTC asset restructuring? **
Assets in crypto investment products hit $37 billion last week, the highest level since June 2022, according to CoinShares data.
These assets may be reshuffled after one or more bitcoin spot ETFs are approved.
Seyffart said: “There are U.S. funds in these Canadian ETFs. If the Bitcoin spot ETF is approved, the U.S. funds in other fields may flow back, not to mention Grayscale and GBTC, and funds will also be funneled into the Bitcoin spot ETF.”
If approved, investors in the trust could seek to sell their GBTC shares and reinvest them in a bitcoin spot ETF, Dave Nadig, a financier at data firm VettaFi, said on the ETF Prime podcast.
Dave Nadig said: "There is $20 billion trapped in a completely collapsed pink sheet trust fund GBTC. I think half of the funds will appear in the bitcoin spot ETF within two weeks."
Geraci believes that the bitcoin spot ETF will initially generate a lot of interest, noting that its launch could “break” the previous trading highs set by other successful ETFs such as BITO.
Geraci said: "There is a lot of pent-up demand here, so that financial advisors and even institutional investors can obtain Bitcoin through traditional financial services channels, and ETF will become a bridge between the traditional financial world and cryptocurrencies."
An April 2022 Nasdaq survey found that 72% of financial advisors would be likely to invest client assets in cryptocurrencies if spot bitcoin ETFs were available in the United States.
According to a January report by Bitwise and VettaFi, 32 percent of financial professionals cite the “lack of easily accessible investment vehicles such as ETFs and mutual funds” as a barrier to deploying cryptocurrencies.
**Approve all at once? Which can be the biggest winner? **
Seyffart noted that there are currently eight active bitcoin spot ETF applications. Additionally, podcast participants pointed out that other firms such as Global X, First Trust, and Charles Schwab may also want to launch their own bitcoin spot ETFs.
Seyffart said the SEC should approve the applications at the same time, but noted that letting BlackRock launch first would be a "very bad decision."
Nadig said that if multiple bitcoin spot ETFs can be listed at the same time, factors such as the brand of the applicant, the depth of the capital market, and the number of institutions may be critical.
For example, Nadig proposed a scenario where BlackRock, Valkyrie and Bitwise launch on the same day. So which one was able to get the most volume in the first four days? Nadig thinks it will be BlackRock, because BlackRock has these deep connections.
But Butterfill said that if the expected large number of bitcoin spot ETFs were issued, it could "dilute" the asset attraction potential of each bitcoin spot ETF.
Nadig said exchanges including Nasdaq, the New York Stock Exchange or the Chicago Board Options Exchange could potentially earn more than the fund’s issuer after the bitcoin spot ETF goes public. Because exchanges are primarily compensated based on trading volume rather than assets, even if the fund is only $1 billion at launch, it could still be one of the most traded ETFs ever for an exchange.