Scale reaches 100 billion US dollars!Wall Street institutions are eager for the approval of Bitcoin ETF and are preparing to bring capital into the market
The upcoming launch of a Bitcoin exchange-traded fund (ETF) will open digital currency investment to institutions and retail investors, which is being hailed as a major breakthrough for cryptocurrencies in the U.S. market. That’s fueled the latest hype cycle for the world’s largest tokens, with bets that wealth managers and financial advisors alike will eventually start allocating a fraction of their trillion-dollar portfolios to crypto investments.
The market expects that the U.S. Securities and Exchange Commission (SEC) may approve related ETFs in mid-January next year or earlier. These funds will buy and sell Bitcoin in the form of low-tax, highly cost-effective ETFs.For the past 10 years, the SEC has rejected such applications. At first glance, this offers a path to redemption for digital asset proponents. A year ago, the FTX collapse triggered the industry’s biggest existential crisis and emboldened opponents of cryptocurrencies that had long dominated traditional finance.
It is estimated that with the participation of heavyweight companies such as BlackRock, Fidelity and Invesco, the Bitcoin spot ETF market may eventually develop into a behemoth with a scale of US$100 billion.Galaxy Digital Holdings Ltd., which is working with Invesco to apply for a Bitcoin listing, held a conference call with about 300 investment professionals earlier this month to discuss allocations for a Bitcoin ETF ahead of its imminent listing, according to a person familiar with the matter. Bitcoin problem.
Florida wealth advisor Jeff Janson is among those preparing for the debut. “I feel like we’re staring down the SEC’s gun right now to finally get approval,” Janson said. “I believe once you can get exposure to it in this format, I think you’re going to have a lot of institutional level interest.”
At least that’s the optimistic scenario. For many, the shockwaves following the FTX incident continue to reverberate through the investment community, with interest in all cryptocurrencies cooling off relative to the days of speculative fever. After the collapse of Sam Bankman-Fried’s financial empire, FTX, everyday investors have largely left the market. Despite its recent rally, Bitcoin is still nowhere near its 2021 highs.
Meanwhile, prominent hedge fund managers like Paul Tudor Jones, who has previously touted the virtues of digital assets, have remained silent recently. Large asset managers have largely refused to disclose the opportunities they see in cryptocurrencies. A series of frauds, including false claims that a Bitcoin ETF had been approved and that BlackRock had applied to set up a fund to hold XRP tokens – both of which initially pushed the price of Bitcoin higher – further weakened the The industry claims it is moving away from claims of a false past.
However, a big reason for the newfound optimism has to do both with the disruptive appeal of digital currencies in the financial system and the incentives built into the fund management industry. Currently, only futures-based Bitcoin ETFs are available to investors, and these ETFs may come with additional costs that impact returns. Investors who want pure Bitcoin can access it through platforms like Coinbase or apps like Robinhood, meaning those overseeing client portfolios give up the ability to directly oversee the flow of crypto investments.
ETFs are therefore a game-changer, said Chuck Cumello, president and CEO of Essex Financial Services, who has received inquiries from millennial investors and high-net-worth individuals about the disruptive potential of Bitcoin ETFs. “It’s simple, easy to make a trade — go long in a client’s investment advisory account,” Cumello said.
Another piece of evidence that institutions may be in the crosshairs of ETF issuers: More obscure-sounding ETFs such as IBTC and BTCO have said their ETF products will target the advisory market. Bloomberg analysts Eric Balchunas and James Seyffart wrote in a note: “When coins are more interesting, it usually suggests they are targeting younger retail investors, which in this case are unlikely to be those investors. The primary audience for the fund.”
Case in point: Compass Financial Advisors analysts Chris Swanson and James Weber built a model portfolio, a customized investment strategy. They often advise clients on how to allocate a certain percentage of their funds to alternative assets such as cryptocurrencies.
For example, a portfolio might be 55% stocks, 25% bonds, and 20% cash, alternative investments, and digital assets. Following the launch of the Bitcoin Spot Fund, the company’s existing crypto bets — for example, through Bitwise’s Crypto Industry Innovation ETF (BITQ) — are likely to see inflows once the Bitcoin ETF becomes available. “We want to make sure we serve our clients well and we think that’s going to be a differentiator between us and other advisers,” Swanson said.
Laila Pence, founder of Pence Wealth Management, a $2 billion wealth management company, also warned that interest in digital assets among young clients has dropped sharply since the outbreak, when a variety of cryptocurrencies were surging. Additionally, she reminded them that the stock market has done well this year. She said: “The S&P and Nasdaq have performed so well this year and are safer and more reliable, why take the risk?”
However,For those who are bullish on cryptocurrencies, there is a more important point to be made: ETFs will normalize a discredited asset class.Coinbase believes its transparency and liquidity provide a compliance-friendly opportunity for institutional counterparties, potentially unlocking new lending and derivatives transactions. “The impact of ETFs on Bitcoin adoption therefore extends beyond direct flows into these products and could reshape the market in unprecedented ways. However, we believe this will take time to unfold,” the agency said in a report.