The recent filing of a Bitcoin (BTC) spot ETF in the United States has undoubtedly generated excitement, but some analysts have mixed opinions on whether the excitement is justified.
BITO experienced its second-highest opening day in history, attracting more than $1 billion, but within a few days most of the inflows stopped.
Looking at existing crypto ETFs in Canada, analysts note that they account for about 1% of the country’s ETF market. If a U.S. spot Bitcoin ETF attracted a similar share of ETF capital, the amount would be $54 billion.
As the race for a spot Bitcoin ETF enters the review phase, the question now arises: Can an approved spot Bitcoin ETF attract funds?
The recent filing of a Bitcoin (BTC) spot ETF in the United States has certainly generated excitement, but some analysts have mixed opinions on whether the excitement is justified. While many believe that approval will bring a wave of new investor capital to the asset, others believe it may simply turn into a “sell the news” event.
FLX Networks CEO Jillian DelSignore questioned whether spot Bitcoin ETFs, which are backed by actual BTC, would attract significant capital in the first few days after launch. Spot Bitcoin ETFs are backed by actual BTC, while futures ETFs are backed by Bitcoin futures contracts.
The ProShares Bitcoin Strategy ETF (BITO) attracted more than $1 billion and experienced its second-best opening day in history, but within a few days most of the inflows stopped.
“I certainly think there will be billions of dollars coming in,” Delsignor said, but he added, “The question for me is what happens next. Can it calm down?”
JPMorgan strategist Nikolaos Panigirtzoglou holds a similar view. The strategist mentioned that spot ETFs have been launched in Canada and Europe for many years, but have not attracted a lot of funds because they have not benefited from the outflow of funds from gold ETFs. Although he acknowledged that there may be some benefits to owning spot ETFs, he predicted that these benefits would be "quite limited."
What are the positive aspects of spot ETFs?
On the contrary, Bloomberg ETF analysts Athanasios Psarofagis and James Seyffart believe that spot ETFs have great potential. Looking at existing crypto ETFs in Canada, the analysts pointed out that they account for about 1% of the country's ETF market. If the U.S. spot Bitcoin ETF attracts a similar share of ETF capital, the amount will reach $54 billion.
In this context, the total U.S. commodity ETF market is $137 billion. In addition, Glassnode analysts said that there is currently about $13.5 billion worth of BTC actively participating in price discovery.
In addition, Nate Geraci, president of consulting firm "The ETF Store", believes that spot ETFs offer more meaningful benefits than futures ETFs, noting that the latter do not fully track the price of BTC. BITO has fallen 63% since its launch, while BTC has only fallen 53% during the same period.
Grayscale Bitcoin Trust (GBTC), the world's largest Bitcoin fund with over 650,000 Bitcoins under management, faces tracking error issues. Currently, its share price is trading at a 26% discount to BTC's underlying value because shareholders cannot easily redeem shares for cash as with ETFs. The fund has launched a legal battle with regulators to ensure that the share price is immediately aligned with Bitcoin's underlying value.
BlackRock’s entry into the bitcoin ETF race in recent months has successfully boosted bitcoin prices in the past few weeks and sparked optimism that a spot ETF could eventually be approved. The company’s CEO Larry Fink, who has been skeptical of bitcoin, said last week that bitcoin “has the potential to outperform any currency.”
