The recent surge in Bitcoin‘s value can be attributed to the anticipation of more ETF approvals starting November. This upward trend, characterized by occasional corrections, has propelled futures demand to record heights. The market now looks ahead, eager to understand the implications of this growth.
Anticipating the Impact of Spot Bitcoin ETFs
Investments in Bitcoin ETFs, primarily from clients of asset management firms, have soared, with total reserves (excluding GBTC) hitting record numbers. While currently representing a substantial market share, the potential for growth is vast, as a larger proportion of assets under trillion-dollar management firms remains untapped. The sector is on the cusp of further expansion, with banking permissions for Bitcoin custody on the horizon. A recent proposal to the SEC could pave the way for banks to become custodians of Bitcoin funds, which would significantly alter the landscape for spot Bitcoin ETFs and how they are classified by large investment advisory firms.
The classification of these ETFs—as investable assets, high-risk, or unsuitable for investment—will be determined after monitoring their performance over the next few months. This decision is crucial as it will signal the readiness of the market to embrace spot Bitcoin ETFs on a larger scale, with significant players such as Vanguard still pending approval.
The Present and Future of Bitcoin ETFs
Current net inflows into Bitcoin ETFs are strong, surpassing $2 billion weekly, with BlackRock’s reserves alone growing by 6380 BTC last week. Demand is currently outpacing daily Bitcoin production by 10 to 20 times and could double post-halving, assuming current inflows persist. Bitcoin ETFs collectively hold 723,301 BTC—a figure to watch, especially when compared to the 1.92 million BTC held by miners. In just one month, spot Bitcoin ETFs, not counting GBTC, have accumulated a significant 263,873 BTC.
This momentum in the Bitcoin ETF market is set to intensify as approvals increase and access to spot Bitcoin ETFs broadens, promising larger trading volumes and greater demand in the cryptocurrency space.