The Debate Over Bitcoin Spot ETFs
The latest influx of Bitcoin spot ETF applications in the United States has sparked excitement and speculation. While some believe that approval will bring in significant investor capital, others argue that it may only result in a sell-the-news event.
The Bearish Case for a Bitcoin Spot ETF
- Jillian DelSignore, Managing Director at FLX Networks, questions whether a Bitcoin spot ETF will attract sustained capital beyond its initial launch.
- She cites the ProShare Bitcoin Strategy ETF (BITO) as an example, which saw a large influx of capital in its first few days but then slowed down.
- JP Morgan strategist Nikolaos Panigirtzoglou agrees, stating that spot ETFs in Canada and Europe have failed to attract substantial capital.
The Positives of a Spot ETF
- Bloomberg Intelligence ETF analysts see great potential for a Bitcoin spot ETF, citing the success of Canada’s existing crypto ETFs.
- They estimate that if a similar share of the United States’ ETF capital rushed into a spot ETF, it could amount to $54 billion.
- Nate Geraci, president of “The ETF Store,” believes a spot ETF provides meaningful benefits to investors compared to a futures ETF.
Tracking Error and the Role of Grayscale Bitcoin Trust
- Investors prefer a spot ETF over a futures ETF due to potential tracking errors.
- Grayscale Bitcoin Trust (GBTC), the largest Bitcoin fund, currently faces a tracking error issue.
- BlackRock’s entry into the Bitcoin ETF race has raised optimism for the approval of a spot ETF.
Hot Take
While the debate over Bitcoin spot ETFs continues, it is clear that there are differing opinions on the potential impact and success of such ETFs. The approval of a spot ETF could bring significant capital into Bitcoin, but it remains to be seen whether it will be a sustained inflow or a short-lived event. Ultimately, time will tell whether a Bitcoin spot ETF will live up to the hype.
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