Exchange-Traded Funds in Bitcoin; Can it flip the table
After months of instability, from what it is understood, with Exchange-Traded Funds (ETFs) the ability to purchase Bitcoin in small amounts, the availability of lower costs, instant diversification, liquidity, and tax efficiency, among others, might secure its status. “The introduction of ETFs has been a positive catalyst for the overall cryptocurrency markets, as evidenced by the all-time highs of Bitcoin in 2022 (about $47 billion) and the expected ongoing uptrend. However, it is important to evaluate the potential risks and ensure appropriate regulatory frameworks in order to mitigate any adverse effects. Ultimately, whether ETFs in Bitcoin become a boon or a bane depends on how they are structured, managed and integrated within the existing financial ecosystem,” Shivam Thakral, CEO, BuyUcoin, a digital asset exchange, told FE Blockchain.
Experts believe that the cryptocurrency market saw a rise within 24 hours, with a total volume of $36.48 billion, reflecting about a 7.38% increase. It is expected that industry experts may witness a significant shift in Bitcoin accumulation patterns after the launch of ETF. Apart from that, ETFs may have the ability to increase participation from retail, institutional and novice investors to participate in the market without worrying about the self-custody of cryptocurrency tokens. “Great accumulation of Bitcoin has begun for both retail and institutional investors,” Cameron Winklevoss, co-founder, Gemini, a cryptocurrency exchange, said.
The number of exchange traded funds (ETFs) worldwide grew markedly during the period from 2003 to 2022. There were 8,754 ETFs globally in 2022, compared to 276 in 2003 as per market research firm, Statista. As of 2022, ETFs worldwide managed assets up to almost $10 trillion dollar. “With several institutional investors offering Bitcoin ETFs, the aforementioned digits may rise. The impact is expected to be positive as it may increase participation, which will eventually propel awareness about digital assets. It is also a sign that cryptocurrency might be included in the mainstream financial structure. With more interest emerging, education and research, investors will be able to make the right cryptocurrency-based investing decisions.” Rahul Pagidipati, CEO, ZebPay, explained.
Furthermore, on the recent conundrum going around the expected launch of ETF, Black Rock, a United States-based, ETF issuer, mentioned that the ‘Bitcoin ETF route should be taken very seriously’. This statement has been criticised mentioning that India may not be prepared for the mass adoption of cryptocurrency and regulations related to it. “As cryptocurrency ETFs move closer to becoming a reality, experts suggest that the market will experience an unprecedented surge in Bitcoin prices. So, Indian regulators need to closely monitor the developments and regulatory decisions made around Bitcoin ETFs in other countries to improve their own approach to cryptocurrency regulation,” Rajagopal Menon, vice president, WazirX, a cryptocurrency exchange platform, concluded.
