Bitcoin ETFs to Be Backed by BTC, Experts Confirm

Bitcoin ETFs Backed by BTC

Rumors have been circulating about the backing of Bitcoin exchange-traded funds (ETFs), causing apprehension ahead of their projected January launch. Some comments have suggested that the ETFs will be backed by “paper Bitcoin” or fractional reserves, leading to concerns about price suppression. However, ETF analysts have dispelled these rumors and clarified that the products will be fully backed by the actual asset itself. The president of ETF Store, Nate Geraci, confirmed that spot Bitcoin ETFs will hold the underlying Bitcoin and that the total value of the trust will be fully backed by actual Bitcoin.

Prospective Issuers and Filing Deadline

There are currently 14 prospective entrants in the race to launch Bitcoin ETFs. These include Grayscale ARK, iShares, Bitwise, VanEck, WisdomTree, Invesco, Fidelity, Valkyrie, Global X, Hashdex, Franklin, Pando, and 7RCC. The Securities and Exchange Commission has set December 29 as the final deadline for submitting final filings and applications.

Ark Sells Grayscale Trust Holdings

In related news, Ark has sold its entire remaining position in the Grayscale Bitcoin Trust (GBTC). The firm used around $100 million from the sale to buy shares of the ProShares Bitcoin Strategy ETF (BITO). This move makes Ark the second biggest holder of BITO for now. Institutions often use highly liquid ETFs for transitions like this.

Hot Take: Spot Bitcoin ETFs Will Be Fully Backed by Actual Bitcoin

The rumors suggesting that spot Bitcoin ETFs will be backed by ‘paper Bitcoin’ or fractional reserves have been debunked by analysts. It has been confirmed that these ETFs will be fully backed by the actual Bitcoin asset itself. This clarification should alleviate concerns about price suppression and provide more confidence in the upcoming launch of Bitcoin ETFs. As the deadline for submitting final filings and applications approaches, the race among prospective issuers intensifies. Additionally, Ark’s decision to sell its Grayscale Bitcoin Trust holdings and invest in the ProShares Bitcoin Strategy ETF demonstrates the growing interest and participation of institutional investors in the cryptocurrency market.