Bitcoin ETF Unlikely to Drive New Interest
A recent survey conducted by Needham & Company reveals that retail investors are not likely to contribute to inflows into a Bitcoin exchange-traded fund (ETF) unless the price of Bitcoin continues to rise. Despite the asset’s already impressive 150% increase this year, individuals who have not yet invested in Bitcoin are unlikely to enter the market through an ETF. In fact, only 11% of respondents without exposure to Bitcoin stated that they would buy it through an ETF. The survey suggests that most investors prefer buying the asset directly on an exchange, even if an ETF is approved.
ETFs Would Help Advisers
The survey also found that ETFs would be beneficial for advisers whose options for providing clients with Bitcoin exposure are limited. However, respondents expect only a small percentage (5-10%) of their clients to own Bitcoin ETF shares unless the price of Bitcoin continues to rise. Currently, Bitcoin is trading at around $41,000, which is approximately 148% higher than its value at the beginning of the year. The upcoming Bitcoin halving in April 2024, which reduces mining rewards, could further boost the price of Bitcoin regardless of ETF approval.
Investors Are Looking for Quality: 21Shares
The appeal of a Bitcoin ETF will depend on the quality of the offering, according to Ophelia Snyder, co-founder of crypto ETF provider 21Shares. She emphasizes that bringing a high-quality product to market quickly is crucial in a world where investors are tired of expensive and inferior crypto products. ARK Invest and 21Shares have already applied to launch a Bitcoin ETF, while BlackRock and other applicants are finalizing technical details for their own ETF applications with the US Securities and Exchange Commission (SEC). The regulator has until January 10, 2024, to respond to ARK’s application.
Hot Take: The Future of Bitcoin ETFs
The survey conducted by Needham & Company sheds light on the current sentiment among retail investors towards Bitcoin ETFs. It suggests that unless the price of Bitcoin continues to rise, retail investors are unlikely to contribute significant inflows into a Bitcoin ETF. Instead, most investors prefer buying the asset directly on an exchange. However, ETFs could be valuable for advisers who have limited options for providing clients with Bitcoin exposure. The quality of the ETF offering will play a crucial role in its appeal to investors. With several applications for Bitcoin ETFs currently under review, the future of these investment vehicles remains uncertain.
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