Bitcoin has been dominating the institutional investment strata for quite some time, and it might continue doing so, thanks to its market domination. Last month, Grayscale’s Bitcoin Trust (GBTC) bought $349 million Bitcoin and around $1.5 billion in December – January 2020-21. However, a Canadian Bitcoin exchange-traded funds have recently joined the race, giving a tough competition to the Grayscale trust.
“The Fund has been created to buy and hold all of its assets substantially in long-term holdings of Bitcoin and seeks to provide holders of ETF Units (“Unitholders”) with the opportunity for long-term capital appreciation,” the company prospectus reads.
Some of the market experts like former Wells Fargo analyst Martin Gaspar are expecting these instruments to replace Grayscale as key drivers of the BTC price going forward.
So, what is this hugger-mugger going on in the crypto space? What is ETF or Exchange-traded funds?
ETF was almost a lost ship in the sea till Gary Gensler got nominated to head the Securities and Exchange Commission (SEC). Of course, the bigger news is North America’s first Bitcoin ETF getting approval by the Ontario Securities Commission, as mentioned above. In a month after its launch, the ETF hit the $1 billion mark in assets under management (AUM). Even a couple of weeks back, Brazil also received its approval for its first-ever ETF sanction from the Brazilian Securities and Exchange Commission.
What is an ETF (Exchange Traded Funds)?
An ETF is a regulated and retail-friendly Bitcoin investment instrument that has been the most asked product in the crypto market. There have been numerous applications in the past that got rejected but the Canadian ETF approval gave a ray of hope to the enthusiasts. Bitcoin ETF majorly has one motive – Bitcoin adoption through retail trading apps.
In layman’s terms, an ETF would let anyone and everyone invest in Bitcoin without having to own a virtual wallet or trust that might deviate as and when the market becomes volatile.
ETF Market News
Firstly, the two biggest news in the FinTech sector pertaining to ETFs is that Morgan Stanley became the first U.S bank to offer access to Bitcoin ETFs to its clients. This is where Bitcoin dominates as an ‘asset class. Secondly, Goldman Sachs and Fidelity applied for an ETF capable of investing in Bitcoin. Isn’t it great?
What Experts are Saying?
The market experts are pretty confident about Bitcoin ETFs as they can be the real thing in 2021. VanEck Associates applied for a bitcoin ETF in December last year. But the U.S’ financial watchdog argued that the bitcoin market is too volatile and is too easily manipulated.
Mike Novogratz, Galaxy Digital founder, and CEO said “My guess is we get an ETF this year”. Novogratz has high hopes for Gensler as SEC chief, characterizing him as tough but also fair. With the Senate confirmation likely to succeed, he says, “I am thrilled that Gary is the head of the SEC.
Gensler’s former colleague at Goldman Sachs in the late 1990s, also added “I don’t think he’s going to be a pushover for our space at all. I think he’s going to be fair.”
Eric Balchunas, Bloomberg Senior ETF analyst, extended his support for the new bitcoin ETFs through a tweet, adding, “U.S. usually follows shortly after. Good sign for U.S. bitcoin ETF.”
Hester Pierce, the SEC Commissioner, popularly known as the crypto mom, is really thrilled to have Gary Gensler, who knows the industry quite well, onboard. She said – ‘I think that a new chairman with a fresh perspective can be helpful in rethinking the approach to approving exchange-traded products.’
These being said, the Bitcoin ETFs are going to get more exposure and approval, as the market experts show optimism towards the future of ETFs and how it can shape the crypto economy, especially for retail investors. Once the approval rate becomes steady, it will definitely affect the Bitcoin price positively – but will it hit the $1,00,000 mark?
Let’s wait and watch!
The findings are based on data collected from various sources. This is not an investment advice. Crypto investing is a high-risk activity and user should do their own research including obtaining appropriate professional advice before taking any investment decision.