The coming introduction of Bitcoin exchange-traded funds, which will open up digital-currency investing to the institutional and the masses, is being heralded as crypto’s big breakthrough on Wall Street.
The newest hype cycle in the world’s largest token is being driven by expectations that wealth managers and financial advisers would finally start to lavish a small piece of their trillion-dollar portfolios on the crypto promise.
Thank goodness for an impending shift in the regulatory pendulum. After a decade of rejecting such applications, the US Securities and Exchange Commission is anticipated to approve exchange-traded funds that will purchase and sell Bitcoin in the notoriously tax-efficient and cost-effective ETF wrapper, probably by mid-January or sooner.
At first glance, it appears to offer a way out for digital-asset supporters a year after the FTX collapse ignited the industry’s most existential crisis and reinforced crypto skeptics who have long controlled traditional finance.
According to Bloomberg Intelligence, the spot-Bitcoin ETF market has the potential to grow into a $100 billion juggernaut over time, thanks to the expected involvement of respected giants like BlackRock, Fidelity, and Invesco. According to a person familiar with the situation, Galaxy Digital Holdings Ltd., which is working on an application with Invesco Ltd., conducted a call earlier this month with around 300 financial professionals about allocating to Bitcoin as an ETF debut approaches.
Meanwhile, hedge fund managers such as Paul Tudor Jones, who formerly lauded the merits of digital assets, have recently been silent. Large asset managers have mainly refrained from describing the crypto opportunity as they see it. A series of fraud occurrences, including erroneous claims that Bitcoin ETFs had already been approved and that BlackRock had registered for a fund holding the XRP token — both of which originally propelled prices higher — have weakened the industry’s assertions that it has moved past its sham-laced history.
However, one major reason for the renewed optimism is due to incentives built into the money-management profession as much as it is to the disruptive attraction of digital currencies in the financial system. Only futures-based Bitcoin ETFs are now available to investors, and these can come with additional charges that reduce returns. Investors who want pure Bitcoin can get it through platforms like Coinbase or apps like Robinhood, which means those who manage their clients’ portfolios lose the opportunity to directly monitor the flow of crypto assets.
Thus, the value of an ETF for Bitcoin adoption extends beyond the immediate inflows into these products, with the potential to reshape the market in wholly unexpected ways.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.