Galaxy Digital emphasized in a Tuesday, October 24 research note that an exchange-traded fund (ETF) could become a successful investment vehicle, unlike the present investors. Its return could offer better returns than the customary products, including trusts and futures that currently account for $21 billion in value.
Spot Bitcoin to Generate Billion-Dollar Inflow
Galaxy Digital observed that the spot Bitcoin (BTC) ETFs can generate $14.4B inflows in the initial year of their issuance. The crypto fund Galaxy Digital added that the ETF offers a better investment vehicle than the reward realized in trusts and futures. The conventional investment products are estimated to have a $21 billion value.
Galaxy Digital projects that the ETF-fueled inflows could hit $27B in the subsequent year and steadily increase to $39B by the third. The crypto fund illustrated that the US wealth management sector would likely become a more direct and addressable market.
The approval of the Bitcoin ETF would make it more accessible. The research note indicates that broker-dealers are managing $27 trillion worth of assets by October 2023. The banks rank second at $11 trillion, while the RIAs are third with $9 trillion to yield a total of $48.3 trillion.
Galaxy Digital notes that Bitcoin spot ETF will facilitate investors in realizing exposure to the largest crypto by market capitalization. The exposure is possible when restricted to highly regulated partners, including conventional funds and banks with a demonstrated history of nurturing reliable customer protection. Also, the partners should demonstrate the capability to offer robust investment offerings.
Spot Bitcoin ETFs Attracting Outsized Demand
The demand is becoming outsized, as witnessed in the previous week’s rumour that triggered a 10% uptrend in Bitcoin price.
The rumour traces from the publication of false information by the cryptocurrency news outlet Cointelegraph. The publication alleged that the SEC had approved the application by BlackRock for the spot Bitcoin. The assertion met condemnation from the SEC, which decried investors falling victim to fake news.
The demand is likely to accelerate, as observed when the community discovered the ticker for BlackRock’s – BLK, leading to a 12% rally in Bitcoin’s price. Galaxy Digital observed that the resulting inflows from spot ETF approval could trigger a 74% leap in the bitcoin price within the initial year. The jump would likely factor in liquidity and price impact on the investments.
Galaxy observed that today’s investment products feature multiple drawbacks for investors, including high fees and declined liquidity blend with tracking errors. The products also become inaccessible to the wide investors holding a significant wealth portion.
Spot ETF is considered as suitable for all investors who seek direct exposure to Bitcoin. The investors embracing ETF often refrain from owning and managing the tracked asset via self-custody.
Investment Community Optimistic of ETFs Boosting Liquidity and Efficiency
Galaxy Digital note illustrates that the Bitcoin ETF yields greater efficiencies via liquidity, fees and easier price tracking. Although the Bitcoin ETF applicants are yet to list the fees they would charge, such often is lower than the charges imposed by the closed-end and hedge funds. Also, the higher ETF applicants would likely facilitate lowering the fees for each to retain competitiveness.
The optimism in spot Bitcoin ETFs generating considerable inflows coincides with a period when market observers and investment executives support the approval of the dozen applications together. Ark Investment’s executive is in support of simultaneous approval of the applications for Bitcoin ETFs just as the Ether ETFs.
Currently, the Securities and Exchange Commission (SEC) is expected to review bids from Grayscale Investments, BlackRock, Fidelity, VanEck and Galaxy. Also on the waiting list are Ark Invest, Bitwise, Wisdom Tree and Invesco. Besides the new entrant in Hashdex, the Gary Gensler-chaired Commission should give its verdict for applications from Global X and Franklin.
SureTradeGroup.com is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site is paid content that is not written or posted by our writers or editors and the opinions expressed do not reflect the opinions of this website. Any disagreement you may have with brands or companies mentioned in articles will need to be taken care of directly with those specific brands and companies. The responsibility of anyone who may click links in our articles and ultimately sign up for that product or service is their own. Forex, Stocks, Cryptocurrencies, NFTs and Dogital Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.