The regulatory approval of a spot Bitcoin ETF, which is anticipated to spark new institutional demand in the top cryptocurrency, has been much anticipated by investors.
Although market participants disagree on how much money such a fund may raise, estimates for its potential inflow range from $3 billion on its first day to an astounding $55 billion over the course of five years, as reported by Reuters on Tuesday.
Dave Mazza, Chief Strategy Officer at ETF provider Roundhill Investments, told the media outlet that the introduction of spot ETFs has the potential to completely change the bitcoin market, drawing a comparison to the gold market.
Analysts’ Take: Spot Bitcoin ETF Targeting $3B Initial and $55B Long-Term,Analysts’ Take: Spot Bitcoin ETF Targeting $3B Initial and $55B Long-Term
When the first spot bitcoin ETFs are launched, he expects a spike in buying activity along the lines of what happened when the first gold ETF was introduced in 2006 or when the bitcoin futures ETF was introduced in 2021.
Several well-known financial behemoths, like as Fidelity and BlackRock, together with companies that specialise in cryptocurrencies, like Grayscale, have applied to be listed as spot bitcoin exchange-traded funds.
Even with all of the excitement over ETFs, some traditional investors are still unconvinced about cryptocurrencies and don’t seem to be interested in these new investment vehicles.
“No single cent of my clients’ funds will end up in these misguided investments,” stated George Gagliardi, an investment advisor of Lexington, Massachusetts’s Coromandel Wealth Management.
Bitcoin Rises as Expectations Around Spot ETF
The current surge in cryptocurrency markets, which saw the flagship cryptocurrency hit $35,198, the highest level since May 2022, was spurred by anticipation surrounding the introduction of a spot Bitcoin ETF.
However, because investors and analysts utilise a wide variety of criteria, it can be difficult to estimate the demand for an ETF.
Large Investor Demand Could Be Increased by a Bitcoin ETF
Proponents think that a spot Bitcoin ETF may see a lot of demand from financial advisors, pension funds, and other money managers, who together oversee over $46.5 trillion.
Head of Digital Assets Research at VanEck, Matthew Sigel, believes that if BlackRock joins the market, several wire companies and financial advisers would add the fund to their platforms. VanEck has a spot bitcoin ETF awaiting SEC clearance.
Based on demand shown in smaller areas where spot bitcoin ETFs are currently available, including Canada, Bitwise Investments CEO Matthew Hougan estimates that spot bitcoin ETFs will draw $55 billion in the first five years.
Not every asset manager fighting for a piece of the action is likely to succeed in the long run, even while there is a chance for significant demand.
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