How analysts, executives are reacting to spot bitcoin ETF approval
The trading of such funds is likely to bring a flood of flows into the crypto market from traditional asset allocators, industry watchers say
Bitwise Chief Investment Officer Matt Hougan | Permissionless for Blockworks
After the Securities and Exchange Commission’s milestone decision to approve spot bitcoin ETFs Wednesday, industry executives and analysts agree such products are set to open up the segment to more investors.
The regulator cleared such proposals by BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Valkyrie, Invesco, WisdomTree, Franklin Templeton and Hashdex, as well as one by Ark Invest and 21Shares, according to a Wednesday filing.
The funds are expected to list in short order, with BlackRock, Grayscale and Fidelity saying in statements they intend for their funds to start trading Thursday.
Read more: SEC officially approves spot bitcoin ETFs in landmark decision
Fund issuer executives react
Dominik Rohe, head of the Americas for BlackRock’s iShares ETF business, said in a Wednesday statement that through the iShares Bitcoin Trust (IBIT), “investors can access bitcoin in a cost-effective and convenient way.”
Bitwise Chief Investment Officer Matt Hougan said in an X post: “We’re so back.”
“We were and remain excited at the prospect of democratizing access to this asset through a U.S. regulated investment vehicle,” Grayscale CEO Michael Sonnenshein said in a statement.
Cynthia Lo Bessette, head of digital asset management at Fidelity, said in a statement the firm has long believed a spot bitcoin ETF would be an efficient way to gain exposure to the asset.
“Fidelity has engaged in constructive dialogue with the SEC for years, and the affirmation of this approval signals positive momentum for the industry, and increased choice for investors who want to engage with digital assets,” she added.
Roger Bayston, head of digital assets at Franklin Templeton, told Blockworks he was “encouraged” by the SEC’s decision. He noted that the ruling gives US investors a simpler means of allocating to crypto.
“We feel that we are well positioned as a firm to leverage our in-depth knowledge of blockchain ecosystems to introduce products like the Franklin Bitcoin ETF (EZBC) that serve to further the understanding and accessibility of digital assets within the broader investing community,” Bayston said.
Valkyrie CEO Leah Wald told Blockworks the firm is “locked and loaded.”
“There’s still a lot that I think we’re testing out,” she said when speaking about the possibility of starting to trade Thursday. “I’m not sure about the other issuers but Valkyrie is meticulous in ensuring our trading operations and every part of operations is seamless.”
Industry watchers weigh the significance
Segment observers and executives predict that the approval of spot bitcoin ETFs is likely to bring a flood of flows into the crypto market from traditional asset allocators.
Spencer Hallarn, head of OTC trading at liquidity provider GSR, said while short-term volatility around the announcement is expected, the approval opens up the crypto space to large pools of capital previously “walled off.”
“While on an individual level BTC and crypto has been quite accessible for years, getting exposure in an institutional construct without the prohibitive roll costs of futures-based products that can be custodied alongside the entirety of folks’ portfolios is important and represents a major step forward for the space,” Hallarn added.
ETFs, or exchange-traded funds, are vehicles widely used by retail and institutional investors alike. There are nearly 2,000 ETFs trading in the US with combined assets under management of roughly $6.4 trillion, according to ETF.com.
A June survey by the Journal of Financial Planning and the Financial Planning Association found that more than 90% of advisers use or recommend ETFs. Nearly 90% of financial advisers interested in buying BTC said they were waiting until a US spot bitcoin ETF is offered, according to a recent survey by Bitwise and VettaFi.
Steven Schoenfeld, CEO of MarketVector Indexes, said he believes family offices, wealth managers, and small institutions who have not yet allocated to BTC are likely to take comfort in the ETF structure. He noted US financial advisers manage more than $30 trillion in assets.
“If just 1% of this amount were allocated to a Bitcoin ETF, it would ultimately translate to $300 billion invested in bitcoin,” Schoenfeld noted. “This substantial influx of capital could significantly impact bitcoin’s market cap, liquidity, and overall stability.”
Price impact?
LMAX Group market strategist Joel Kruger said in December the potential approval of spot bitcoin ETFs could be “a rare buy the rumor, buy the fact event.” He noted an approval could trigger a rally amount to 10% or 15%, fueled by sidelined capital.
The price of bitcoin was at roughly $46,450, as of 5:30 pm ET — up about 1.2% from an hour prior.
Galaxy Digital research associate Charles Yu wrote in an October report that the price of bitcoin could increase by 74% in the 12 months following approval. This stemmed, in part, from his flow estimate into such funds: $14.4 billion in the first year of trading.
Read more: To gauge impact of bitcoin spot ETF, analysts look to gold
“The ripple effects of a spot bitcoin ETF could lead to a recalibration of market dynamics, aligning them closer to traditional financial markets, yet retaining the distinct characteristics of the crypto world,” Sheila Warren, the CEO of Crypto Council for Innovation.
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