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Tuesday, November 28, 2023

Bitcoin ETF Hope Pushes Crypto Fund Investments to $1.5 Billion

As long as there’s hope for a Bitcoin ETF, institutional investors keep pouring cash into crypto funds, according to a new report ↗ from CoinShares.

The European digital asset manager clocked $346 million worth of deposits to crypto exchange-traded products (ETPs) last week. That’s the highest they’ve been over 9 consecutive weeks of net inflows—bringing year-to-date deposits to $1.5 billion.

Deposits into Bitcoin-specific funds accounted for $312 million, or 90%, of the inflows from institutional investors. Thanks to those inflows and rising prices, the total value of assets under management in crypto funds has risen to $45 billion.

Bitcoin is the largest crypto asset by market cap. Image: Shutterstock

An exchange-traded product is an investment vehicle that has its shares listed on an exchange. They’re meant to track the performance of underlying assets, like Bitcoin and Ethereum, or benchmarks like commodities, currencies, stocks, and bonds. Exchange-traded funds fall under the ETP umbrella, but differ in one important way: A spot ETF would track the real-time price of Bitcoin, which none of the already-approved future Bitcoin ETFs ↗ can do.

The Securities and Exchange Commission has been steadfast in saying there’s too much volatility and risk of manipulation in crypto markets to allow a spot Bitcoin ETF to trade in the U.S. Yet many industry observers say there’s too much smoke for there not to be fire within the SEC, hinting that a long-overdue approval may be coming.

And to be fair, there’s been some hijinks already: A false report about the BlackRock Bitcoin ETF being approved caused Bitcoin to spike 10% in October ↗. More recently, someone impersonated the Wall Street titan to register a fake iShares XRP Trust ↗. The token soared on the news and then sank when BlackRock said the filing was fake. Within a day, the matter was referred to the Delaware Department of Justice ↗.

Meanwhile, CoinShares is almost as much a player as it is an observer in the race to get a Bitcoin ETF registered in the states. Two weeks ago the company announced that it had obtained an option to acquire U.S.-based digital asset manager Valkyrie’s ETF business ↗.

It has until January 10 to green light the deal. Valkyrie is one of many firms ↗, along with BlackRock and VanEck, that applied to offer a spot Bitcoin ETF in the U.S.. The firm first submitted an application for a Bitcoin ETF in 2021. After being rejected, the company resubmitted an application for its Valkyrie Bitcoin Fund in June 2023.

BFIA Admin
BFIA Admin
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