Analysis: If the Bitcoin spot ETF is approved, it may be the largest ETF in history.
Analysis: Bitcoin spot ETF approval could create the largest ETF ever.
Author: Ben Strack, Blockworks
Translation: Felix, BlockingNews
Industry observers say a Bitcoin spot ETF, if approved by the US SEC, could be one of the largest ETFs ever launched.
A Bitcoin spot ETF could compel investors to shift billions of dollars away from Grayscale’s Bitcoin Trust (GBTC), Canadian Bitcoin ETFs, and other crypto products.
James Seyffart, an analyst at Bloomberg Intelligence, said during the ETF Prime podcast hosted by The ETF Store’s Nate Geraci on July 5 that a Bitcoin spot ETF “could be one of the largest ETFs ever launched.”
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Seyffart cited the ProShares Bitcoin Strategy ETF (BITO) as one of the most successful ETFs to date. Launched in October 2021, the fund holds Bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), and managed assets of over $1 billion within its first two days of operation.
But James Butterfill, research director at CoinShares, said that a physically backed ETF that meets more due diligence requirements than BITO, as it provides bankruptcy protection for fund issuers and closely tracks Bitcoin prices, is expected to see significantly increased demand for a Bitcoin spot ETF, especially if it is launched by an asset management giant like BlackRock.
Butterfill said: “There are quite a few clients waiting for competitors to get into Bitcoin first to avoid becoming cannon fodder. If BlackRock were to issue an ETF, it could eliminate a lot of negative comments about cryptocurrencies, which could result in early investment inflows significantly higher than Proshares in 2021.”
GBTC asset reshuffle?
According to CoinShares data, assets in cryptocurrency investment products hit a high of $37 billion last week, the highest level since June 2022.
These assets could be reshuffled once one or more Bitcoin spot ETFs are approved.
Seyffart said: “There are US funds in these Canadian ETFs. If a Bitcoin spot ETF is approved, US funds in other areas may flow back, not to mention Grayscale and GBTC, with funds also flowing into Bitcoin spot ETFs.”
Financial analyst Dave Nadig of data company VettaFi said on the ETF Prime podcast that if approved, investors in the trust fund could seek to sell their GBTC shares and reinvest them in a Bitcoin spot ETF.