Author: BEN STRACK, blockworks Translation: Blocking, Shanouba
Dave Nadig of VettaFi predicts that if a Bitcoin exchange-traded fund (ETF) is approved, investors could move $10 billion in assets from Grayscale Investments’ Bitcoin Trust Fund (GBTC) to a Bitcoin ETF within two weeks. Industry observers say that while the prospects for a Bitcoin ETF entering the U.S. market are uncertain, if the SEC approves the issue, it could become one of the largest ETFs ever.
A Bitcoin ETF could prompt investors to reallocate billions of dollars from Grayscale Investments’ Bitcoin Trust Fund (GBTC), Canadian Bitcoin ETFs, and other cryptocurrency products. James Seyffart, an analyst at Bloomberg Intelligence, said in the July 5 ETF Prime podcast that a Bitcoin ETF “could be the largest or at least one of the largest issuances ever.”
Meanwhile, physically-backed Bitcoin ETFs may be more favored as they meet more due diligence requirements, provide fund issuers with bankruptcy protection, and closely track the price of Bitcoin. James Butterfill, research director at CoinShares, said he expects demand for physically-backed Bitcoin ETFs to be higher, especially if asset management giants like BlackRock launch the product.
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GBTC Asset Restructuring?
According to CoinShares’ data, assets in crypto investment products reached $37 billion last week, the highest level since June 2022. Dave Nadig, a futurist in finance at data firm VettaFi, said in the ETF Prime podcast that if a Bitcoin ETF is approved, GBTC investors could sell their GBTC shares and reinvest the funds in a Bitcoin ETF.
All approved at once? Who wins the assets?
After the spot Bitcoin ETF is approved, it is expected that funds will be reallocated, including the transfer of funds from Grayscale Investments and GBTC. There are currently eight Bitcoin ETFs on file, and other companies such as Global X, First Trust, and Charles Schwab may also launch similar products.
Industry observers suggest that the U.S. Securities and Exchange Commission should approve multiple proposals at the same time rather than allowing a single company to be the first to launch, to avoid adverse market effects. Factors such as brand influence, capital market depth, and institutional quantity may play an important role in which Bitcoin ETF can take a leading position in the market.
Exchanges will also profit more from successful products that are listed since they primarily earn money based on trading volume rather than assets under management. Even if a fund only has $1 billion in assets, it could still be one of the most traded ETFs ever.