VanEck Reports Accelerated Big Bank and Broker Interest in Bitcoin

In the recent update, the crypto assets research chief at VanEck, Matthew Sigel, indicated growth in the demand for Bitcoin exchange-traded fund (ETF) access among banks and wirehouses.

Sigel acknowledges a higher appetite for Bitcoin portrayed by substantial financial institutions led by brokerages and banks fueled by their clients’ desire for Bitcoin ETFs.

The head of crypto assets research indicated that more institutions are edging closer to embracing the offerings. The trend yields increased opportunity, fueling subsequent adoption of the new asset class. 

 Spot Bitcoin ETF Performance Portrays Historic Success

Sigel downplayed the existence of obstacles that could hinder Bitcoin adoption. The executive added that Bitcoin’s relationship with Wall Street occurs via several phases. There appears to be icy indifference blended with intrigue about the potential of digital assets. 

The availability of Bitcoin spot exchange-traded funds (ETFs) in the market yields a warm-up relationship. The improved relationship arises from more institutional clients expressing interest in investing in the new products. 

The spot Bitcoin ETF performance portrays a historic success. Sigel observes that the initial trading day saw $4.5 billion. The activity set a massive start by the standards. Three spot Bitcoin ETFs are Fidel, city, Ark Invest’s 21Shares, and BlackRock, which have hacked $1 billion. BlackRock is leading other issuers now, holding over $5 billion.  

VanEck is among the spot ETFs the US Securities and Exchange Commission (SEC) approved on January 10. To date, VettiFi data shows VanEck has over $175.5 million within its assets under management (AUM). 

Sigel illustrated that ETF listing has portrayed smashing success in aggregate performance, attracting record-breaking inflows. The inflows moved the Bitcoin price upwards, though momentarily hampered by the Grayscale’s outflows. The outflow arose from investors cashing on profits as Grayscale converted the trust into a spot ETF. 

JPMorgan analysts in their latest report projected the Grayscale’s outflows to decline. The report is optimistic that the declined bleeding will relieve pressure on the Bitcoin price.

Sigel indicates that the outflows seemingly slow open an opportunity to surpass expectations. He echoes the reports by ETF analysts and issuers that the majority of the trades executed are concentrated within retail.

Institutions Embrace ETFs as Clients Demand Exposure in Bitcoin

Sigel acknowledged the existence of conversations involving wirehouses and banks to offer spot ETFs to their clients. The higher demand for the clients prompts the move.

Financial institutions have in the past portrayed a conservative approach to offering the spot Bitcoin ETFs relative to the discretionary portion of customers’ portfolios unless requested. 

Sigel’s observations align with the survey conducted by financial advisors from ETF issuer Bitwise. The January 4 publication illustrated the demand to establish exposure in Bitcoin, with 88% of respondents illustrating their willingness to acquire the ETFs as they become available.  

Sigel observes that fierce competition portrayed by ten players features dominance from the Wall Street giants – Fidelity and BlackRock. The rivalry prompted the cut fees pre- and post-approval as they attempted to outflank each other. 

The trade-off in the fee cuts is eroding profitability for the ETF issuers. Sigel, whose VanEck lowered the management fee to 0.25%, seeks to match rivals. The executive considers the current rates competitively priced and not an obstacle to subsequent adoption. 

Bitcoin Price Critical to Subsequent ETFs’ Profitability

Sigel considers that the critical metric one should watch is the Bitcoin price since it is essential to influencing future ETFs’ profitability. 

Sigel downplayed the likelihood that the ETF issuers would shut down the ETF when their price doubled. Instead, the executive urges calmness and monitors if the custody costs would be reduced other than management fees cut.  

A review of the market activity shows that Bitcoin’s price regained to exchange hands at $52,480. The price is the highest since Bitcoin slipped from its major rally in November 2021. 

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