One of the most unexpected aspects of the race to establish a spot bitcoin ETF is the possibility that the SEC would allow numerous ETFs that essentially track the same commodity at the same time. As multiple firms, including BlackRock, Grayscale Investments, and Bitwise Asset Management, compete to launch exchange-traded funds that track physically backed bitcoin, …
One of the most unexpected aspects of the race to establish a spot bitcoin ETF is the possibility that the SEC would allow numerous ETFs that essentially track the same commodity at the same time.
As multiple firms, including BlackRock, Grayscale Investments, and Bitwise Asset Management, compete to launch exchange-traded funds that track physically backed bitcoin, the Securities and Exchange Commission has allowed applications to pile up, lengthening the time it takes to deliberate on them all.
Nonetheless, following Grayscale’s unanimous and decisive court victory against the SEC on August 29, investors are more optimistic than ever that a so-called “spotcoin” could become a reality. While the SEC has approved ETFs that track bitcoin futures contracts, it has so far denied applications for ETFs that track physically backed cryptocurrencies due to investor protection concerns.
Even as companies prepare for a vigorous struggle for market share, they are urging the SEC to approve all ETFs at the same time. Cathie Wood, CEO of Ark Invest, and Matt Hougan, CIO of Bitwise, have both stated that the SEC will and should accept numerous spot bitcoin applications at the same time.
Nonetheless, following Grayscale’s unanimous and decisive court victory against the SEC on August 29, investors are more optimistic than ever that a so-called “spotcoin” could become a reality. While the SEC has approved ETFs that track bitcoin futures contracts, it has so far denied applications for ETFs that track physically backed cryptocurrencies due to investor protection concerns.
The First-Mover Advantage
Even as companies prepare for a vigorous struggle for market share, they are urging the SEC to approve all ETFs at the same time. Cathie Wood, CEO of Ark Invest, and Matt Hougan, CIO of Bitwise, have both stated that the SEC will and should accept numerous spot bitcoin applications at the same time.
When the Securities and Exchange Commission (SEC) certified the first ProShares Bitcoin Strategy ETF (BITO) in October 2021, the fund gained a long-lasting and substantial first-mover advantage. The fund made a big impression, with a trading volume of almost $1 billion on its first day.
The advantage has lasted until the present day. BITO presently has around $931 million in assets under management, whereas the Valkyrie Bitcoin Strategy ETF (BTF), which began a few days after BITO, has only $25 million.
Other instances of first-mover advantage, according to Bryan Armour, an ETF analyst for Morningstar, have led in ETFs gaining “so much interest in liquidity and such an advantage that it’s still really hard to supplant them.”
When the Securities and Exchange Commission (SEC) certified the first ProShares Bitcoin Strategy ETF (BITO) in October 2021, the fund gained a long-lasting and substantial first-mover advantage. The fund made a big impression, with a trading volume of almost $1 billion on its first day.
The advantage has lasted until the present day. BITO presently has around $931 million in assets under management, whereas the Valkyrie Bitcoin Strategy ETF (BTF), which began a few days after BITO, has only $25 million.
Other instances of first-mover advantage, according to Bryan Armour, an ETF analyst for Morningstar, have led in ETFs gaining “so much interest in liquidity and such an advantage that it’s still really hard to supplant them.”
If these items are approved at the same time, the companies will have a better chance of winning the market by differentiating themselves. According to Edelman, BlackRock has the advantage of being a traditional finance brand, whereas Bitwise has the advantage of focusing on cryptocurrencies.
Firms may also aim to differentiate themselves by targeting different market segments. “Some asset managers who are really plugged in with a new advisor may be able to use that advantage to get their funds into those advisors’ client portfolios,” Armour added.
Fees will most likely be the most significant and influential factor: The Grayscale Bitcoin Trust charges a 2% fee, which will need to be reduced in order to compete in the ETF market. The industry average in the United States is around 0.5%. According to etf.com data, the average expense ratio for crypto ETFs is 0.98%.
Risk disclaimer:
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.
