Anticipation is building on Wall Street as the arrival of Bitcoin exchange-traded funds (ETFs) looms, heralding what is deemed as crypto’s breakthrough on the institutional stage. According to Bloomberg, the expected green signal from the US Securities and Exchange Commission (SEC) for these ETFs is fuelling a fresh hype cycle, with industry insiders eyeing a potential $100 billion market.
The regulatory pendulum, once a hindrance, is now swinging favourably, paving the way for institutional and retail investors to delve into the digital currency space.
As the SEC gears up to potentially approve Bitcoin ETFs by mid-January or sooner, the move is seen as a redemption opportunity for digital asset proponents. The involvement of heavyweight players like BlackRock, Fidelity, and Invesco is likely to contribute to the growth of the spot-Bitcoin ETF market.
Bloomberg Intelligence estimates suggest that, with these reputable players on board, the market has the potential to evolve into a $100 billion juggernaut over time.
Jeff Janson, a wealth adviser managing about $550 million, expressed his confidence in the imminent SEC approval. He told Bloomberg, “I feel like we are now staring down the gun barrel of the SEC finally delivering approval.”
He anticipates significant institutional-level interest once Bitcoin is accessible through the ETF wrapper. This sentiment aligns with the bullish outlook that the involvement of major institutions can transform the digital asset landscape.
However, despite the optimism surrounding the Bitcoin ETFs, the aftermath of the FTX implosion continues to cast a shadow on the crypto market. The shockwaves from the industry’s largest existential crisis have restrained interest, especially from everyday investors.
Bitcoin, despite recent rallies, has not yet reached its 2021 high, and notable figures in finance, like hedge fund manager Paul Tudor Jones, have maintained a low profile on digital assets. Scam incidents, false claims, and market volatility have added complexities to the narrative of crypto’s integration into traditional finance.
Bloomberg cited Chuck Cumello, president and CEO of Essex Financial Services, who emphasises the game-changing potential of a Bitcoin ETF, stating it would simplify trading and make it more accessible for clients. The ETF’s introduction is viewed as a significant development, offering a direct and supervision-friendly method for institutions to include crypto investments in their portfolios. The ETF’s appeal extends to both millennial investors and high-net-worth individuals.
Laila Pence, founder of Pence Wealth Management, offers a word of caution, highlighting the waning interest in digital assets among younger clients. She points out the solid performance of traditional markets, questioning the necessity of taking risks in the crypto space when more conventional options are considered safer. Pence’s perspective underscores the diverse opinions within the financial advisory landscape regarding the adoption and potential risks associated with cryptocurrency.
To some, the introduction of Bitcoin ETFs is more than a market opportunity; it symbolises the normalisation of a once-discredited asset class. The transparency and liquidity offered by the ETF structure are seen as a compliance-friendly avenue for institutional players, potentially unlocking fresh lending and derivatives trades. Coinbase emphasises that the ETF represents more than immediate inflows, predicting it could reshape the market in entirely unprecedented ways, albeit over time.
(With inputs from Bloomberg)