John Palmer, the CEO of CBOE Digital, recently noted that Bitcoin spot ETF approval may lead to a flurry of institutional investments. He was speaking with the journalists at Bloomberg when he noted that the listing of the first spot Bitcoin ETF will lead to a new wave of institutional and retail investment interest in Bitcoin derivatives.
He further stated that the most likely investment vehicles are pension funds and RIA-based funds that are available for investments in assets that are added to Bitcoin spot ETF.
He stated that various funds are unable to add Bitcoin as a direct investment. It is important to note that RIA firms are regulated by federal agencies for investment consultation. His comments arrived only a week before the January 10th announcement ETF decision by the SEC.
On the day, the regulatory agency has to issue a verdict regarding approving the Bitcoin spot ETF application. Palmer also stated that Bitcoin derivatives traction may gain major momentum based on the anticipation around Bitcoin spot ETF. He opines that institutional investors are going to add more derivatives in order to hedge risks.
Mutual Funds to Gain Exposure in Bitcoin Spot ETFs Following Listing
As per the statement issued by Palmer, institutional investors are going to lead the way for creating more trading traction in Bitcoin spot ETF. He retained that retail investors are also likely to follow suit. CBOE Digital has listed futures and options trading options for digital currency investors.
The firm is also in the process of introducing a Bitcoin and Ether margined derivatives on 11th January. In this manner, the account holders on the platform will be able to trade derivative contracts without maintaining a fully backed collateral account.
At the same time, various mutual funds are also doing research to invest in Bitcoin spot ETFs following a listing. On 2nd January, Advisors Preferred Trust a mutual fund management firm edited the prospectus to add 15% indirect exposure to Bitcoin through Grayscale Bitcoin Trust, Bitcoin futures contracts, and ProShares Bitcoin Strategy ETF.
There are also reports that various mutual funds that are listed on NASDAQ are updating their prospectus in order to invest 15% to 50% of their AUM in Bitcoin in the form of Spot Bitcoin ETFs.
Bitcoin Spot ETF Applicants to Make 19b-4 Amendment in SEC Filings
SEC spot Bitcoin ETF filings have revealed that various firms have opted for a 19b-4 amendment form. This filing is considered the final stage of the SEC approval process. At the same time, firms have also submitted S-1 documents in order to list shares of spot ETF on US exchanges that have direct exposure to Bitcoin.
Various experts have projected that spot Bitcoin ETF can be finalized on 10th January, 2024. At the same time, analyst such as James Seyffart have noted that approval of Bitcoin spot ETF can mean greater trading volume and capital inflows for Bitcoin within the United States and around the globe.
Asset management firm VanEck recently pledged 5% profits from Bitcoin spot ETF to Bitcoin core developers. On the other hand, a survey by Bitwise has revealed that 39% of financial advisors believe that a Bitcoin spot ETF will be approved by 2024. However, the survey added votes from only 437 participants hailing from IRAs, planners, institutional investors, and brokers.