Smash-hit Bitcoin ETF ups the ante for issuers racing to launch – Economic Times

smash-hit-bitcoin-etf-ups-the-ante-for-issuers-racing-to-launch-–-economic-times

The cryptocurrency universe got its long-awaited wish: Not one, but two U.S. Bitcoin-linked exchange-traded funds finally launched, bringing further mainstream acceptance and a flood of cash.

But after the stunning success of the ProShares Bitcoin Strategy ETF (ticker BITO) — which accumulated more than $1 billion in assets in just days — the stakes are higher than ever for the queue of issuers hoping to gain a foothold in the sector. Indeed, when the Valkyrie Bitcoin Strategy ETF (ticker BTF) debuted Friday, 3.1 million shares changed hands. That compares with the 24 million BITO shares traded at Tuesday’s launch, which unleashed enthusiasm that helped send Bitcoin to record a day later.

Those could be worrying stats for the firms behind seven pending applications for futures-based ETFs that are now in front of the Securities and Exchange Commission and most likely to win clearance next. Meanwhile, Grayscale Investments LLC filed to convert its $40 billion Bitcoin fund into a physically backed ETF that would track the cryptocurrency — a structure that U.S. regulators have yet to approve but would be a game changer.

“It’s a competitive landscape,” Jesse Proudman, co-founder and CEO at Makara, a crypto-advisory firm, said by phone.

The $6.8 trillion ETF industry is notoriously fierce. Issuers, forced to try to stand out in an over-saturated market, duke it out among one another by offering exposure to thematic industries or by continuously decreasing their management fees or luring in investors through quirky tickers. It’s also historically been assumed that whoever receives approval first stands to reap the greatest benefits — including industry recognition as well as potentially attracting huge amounts of cash. Crypto may not be exempt from this trend.

“First-mover advantage can have pretty significant benefits from an AUM perspective as investors go to allocate,” Makara’s Proudman said, referring to assets under management. “I don’t think there’s room for nine different ETF products all representing the same physical asset so I think attrition of some of these applications is inevitable.”

Some analysts anticipate BITO will continue to attract more cash, perhaps even as much as $50 billion in the ETF’s first year given the hype around it, said Bitcoin bull Tom Lee.

(What’s moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

Download The Economic Times News App to get Daily Market Updates & Live Business News.

You May Also Like

About the Author: Kate