May 27, 2024


NYDIG predicts that Bitcoin Spot ETFs will unlock a $30 billion investment wave. But it’s up to the SEC.

When BlackRock announced the Bitcoin ETF filing on June 15, the financial markets were rocked. Excitement built up among investors, followed by Bitcoin soaring over 20% and several Wall Street top funds lining up for the same purpose.

Bitcoin ETFs Are Here

A decade has passed since the first registration statement for a Bitcoin ETF was filed (and rejected).

Amid the anticipation, the research team of New York Digital Investment Group (NYDIG) sheds light on the current state of the cryptocurrency investment market and the potential benefits of a Bitcoin spot ETF.

NYDIG’s analysis forecasts a $30 billion inflow upon the potential approval. Nearly $29 billion has already been invested in various Bitcoin funds globally.

However, this significant sum is primarily held in existing structures, such as trusts, futures-based ETFs, and spot-based ETFs outside the US. A spot Bitcoin ETF in the US would offer a fresh alternative, potentially remedying some of the drawbacks associated with the existing options.

The bullish viewpoint for a spot ETF is supported by the advantages it could bring to investors, including improved liquidity compared to private funds, lower tracking error than trusts and closed-end funds, and the potential for lower costs.

The combination of investor protections and the reputable brand recognition of BlackRock and the iShares franchise adds further appeal to the proposed ETF.

Drawing parallels with the gold market, where ETFs hold only 1.6% of the total gold supply, NYDIG highlights that global ETFs currently account for 4.9% of Bitcoin’s supply. This suggests a higher proportion of Bitcoin’s supply is already held in various fund formats, implying strong investor interest.

Big Demand For BTC

The estimated $30 billion in demand relies heavily on regulatory approval from the SEC. The uncertainty surrounding the decision makes it essential for investors to weigh the probabilities and potential fund flows.

Historically, the success of the GLD ETF, launched in 2004, serves as a point of reference for understanding how a spot Bitcoin ETF could develop.

While the path to success may not be linear, the impact of a spot Bitcoin ETF could be transformational for the investment community and potentially shape the New American Dream.

In the coming months, investors and market participants will be eagerly awaiting the SEC’s ruling on the spot Bitcoin ETF. If approved, this financial product could mark a new era in the cryptocurrency space, unlocking significant investment opportunities.

SEC Accepts Bitcoin ETFs for Review

The highly anticipated approval of a spot Bitcoin ETF in the US has captured the attention of investors worldwide, marking a pivotal moment in the cryptocurrency landscape. However, the ultimate realization of this potential still hinges on the decision of the US Securities and Exchange Commission (SEC).

On July 13, the SEC officially received applications to open a spot in Bitcoin ETF from several financial giants and started the review process. The list of those financial institutions includes BlackRock, Fidelity, WisdomTree, VanEck, Invesco, Bitwise, ARK 21Shares, and Valkyrie.

The SEC initially responded to the applications on June 30, stating that these filings for Bitcoin ETFs do not meet the requirements. Following the SEC response, major financial institutions quickly revised and re-filed their Bitcoin ETF applications.

Amid BlackRock’s preparations for the Bitcoin ETF, there is considerable optimism surrounding the approval rate by the SEC. Speculations are also swirling about the potential implementation of a market surveillance mechanism, which could further bolster the chances of approval.

However, it remains unpredictable since the agency has declined all previous filings for a Bitcoin spot ETF. Looking forward, and given the approval of similar products in other nations, the SEC has little choice.


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