The Chicago Board Options Exchange (CBOE) Sees Potential for Institutional Investment in Bitcoin ETFs
The president of CBOE Digital, John Palmer, believes that the approval of spot Bitcoin ETFs will open up opportunities for institutional and retail investors. This approval would allow pension funds and Registered Investment Advisor (RIA)-based funds to invest in Bitcoin assets, which is currently challenging due to various barriers. The Securities and Exchange Commission (SEC) will decide on January 10 whether to approve the ARK Invest 21 Shares Bitcoin ETF application, a decision that could have significant implications for the market.
Expansion of Bitcoin Derivatives Products Expected
If a spot ETF is approved, Palmer anticipates a substantial expansion of Bitcoin derivatives products. Institutional investors are likely to rely on these derivatives to mitigate risks associated with Bitcoin holdings. Additionally, retail investors may also seek similar opportunities. CBOE Digital plans to launch margined Bitcoin and Ether derivatives trading on January 11, allowing investors to trade these contracts without providing full collateral.
Mutual Funds Consider Exposure to Spot Bitcoin ETFs
Anticipating the approval of spot Bitcoin ETFs, some mutual funds have already adjusted their prospectus to allow for potential indirect exposure to Bitcoin. Advisors Preferred Trust, for example, may invest up to 15% of its total assets in shares of Grayscale Bitcoin Trust, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts.
SEC Overwhelmed With Paperwork as Spot ETF Deadline Approaches
As the January 10 deadline for spot Bitcoin ETF approvals approaches, the SEC is reportedly swamped with paperwork. It seems unlikely that spot Bitcoin ETF approvals will happen immediately due to vacations and work overload at the SEC. Industry experts speculate that the SEC will need more time to review the changes made to the ETF applications before making a decision.
Hot Take: Potential for Institutional Investment in Bitcoin ETFs
The approval of spot Bitcoin ETFs has the potential to attract institutional investors, such as pension funds and RIA-based funds, to invest in Bitcoin assets. This could lead to increased interest and participation in the cryptocurrency market. While the SEC’s decision on the ARK Invest 21 Shares Bitcoin ETF application is eagerly awaited, it remains to be seen how the market will respond to potential ETF approvals and the subsequent expansion of Bitcoin derivatives products.
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