Bitcoin ETF Hype Threatens Another Sell-the-News Fizzle
The best argument in favor of approving new Bitcoin exchange-traded funds is that they already exist, tracking futures. Sadly for the crypto crowd, that’s also the best argument for why nobody needs a new one.
Proponents say that the arrival of a US spot ETF would open the floodgates to a new wave of investors, potentially ushering in more than $50 billion of demand. A fresh batch of applications led by asset management titan BlackRock Inc. reignited optimism that the Securities and Exchange Commission may finally give its blessing after more than a decade of denials, powering a 20% Bitcoin rally since mid-June.
On the other side, naysayers are skeptical that a US spot fund would be a true game changer. After all, everyone who has wanted access to exchange-traded Bitcoin products that do virtually everything a spot tracker will do has been able to get it, albeit somewhat imperfectly — for more than two years. And for the most part, they haven’t cared.
The debut of the first US Bitcoin futures-backed ETFs happened back in October 2021 — in an eye-catching way. The ProShares Bitcoin Strategy ETF (ticker BITO) experienced roughly $1 billion in turnover right from the get-go. That acted as a catalyst for Bitcoin hitting an all-time high of nearly $69,000 just weeks later.
Yet the early momentum didn’t carry through — the fund never saw the same amount of flows as it did then.
“Look at what we saw on futures front — it was a lot of money that went in Day One, but then — for all intents and purposes — it paused,” Jillian DelSignore, managing director and head of strategic growth and solutions at FLX Networks, said in an interview. “I think we’ll definitely see multiple billions of dollars come in. I do think it will be a very early momentum-driven asset growth, and then the question mark for me is what happens from there. Does it quiet down?”