Bitcoin ETF Listings Imminent, Yet Funds May Delay: 21Shares Co-Founder

• Effects of ETF Listings to Take Months to Assess
• First Spot Bitcoin ETFs Approved in the U.S.
• Bitcoin ETFs and the Impact on the Market
• Projected Inflows and Market Impact
• Potential Uncertainties in the Crypto Industry
• Providers Seek Differentiation Post-Approval
• Grayscale's Differentiation Strategy
• Outlook for Grayscale in Light of New Pricing

Effects of ETF Listings to Take Months to Assess

The effect of ETF listings could potentially take months to fully grasp, as stated by Ophelia Snyder, co-founder of the cryptocurrency custodian 21Shares. Fund managers generally need a minimum of 90 days to finalize additions to their approved allocation list. Despite ETFs receiving approval, the underlying asset is not immune to the risk of SEC disapproval.

First Spot Bitcoin ETFs Approved in the U.S.

The first spot bitcoin exchange-traded funds (ETFs) have finally gained approval in the U.S., with listings on exchanges expected to take place within days, according to Snyder of 21Shares. However, the impact on the market will likely take several months to measure. Wealth management firms are subject to certain processes before ETFs can be added to their approved allocation lists. Snyder's firm, based in Zug, Switzerland, collaborated with Cathie Wood's ARK Invest to propose an ETF that was granted approval by the Securities and Exchange Commission (SEC).

Bitcoin ETFs and the Impact on the Market

Snyder anticipates the first funds to be listed on exchanges within two days, similar to the timeline it took the ProShares Bitcoin$42,260 -0.64% Strategy (BITO) ETF after its approval in October 2021. Predicting the potential changes in trading volumes resulting from ETF inflows can be challenging. Bitcoin (BTC), the most significant cryptocurrency, has seen a 50% rally in the past six months, with traders betting on the introduction of ETFs, which could attract significant demand from institutional investors.

Projected Inflows and Market Impact

Analysts at Standard Chartered predict $1 billion of inflows within three months after approval and potentially more than $100 billion by year-end. Snyder mentioned that there have been roughly $1.2 trillion of net inflows into ETFs in the last 24 months, while the total market cap for all cryptocurrencies is approximately $1.8 trillion.

Potential Uncertainties in the Crypto Industry

Despite the ETF approval, uncertainties remain about the cryptocurrency industry, which will now face greater scrutiny. Approval does not necessarily negate the SEC's reservations about cryptocurrency. SEC Chair Gary Gensler has frequently expressed his concerns about the crypto industry, dubbing parts of it as the Wild West.

Providers Seek Differentiation Post-Approval

Following the approval, providers are now seeking ways to distinguish themselves from their competitors, particularly in terms of fees. The race towards lower fees was ignited with the first announcement, as initial charges were primarily between 0.24% of net assets and 0.90%.

Grayscale's Differentiation Strategy

Notably, Grayscale is planning to convert its Bitcoin Trust (GBTC) into an ETF and intends to charge a 1.5% fee. The investment firm may count on its relative size advantage to offset the higher fee. Grayscale, which already manages over $27 billion of assets even before approval, can potentially offer higher volume and liquidity than its competitors.

Outlook for Grayscale in Light of New Pricing

Whether Grayscale will experience substantial outflows to cheaper funds is contingent on their investors' motivations and investment timelines. There's unlikely to be immediate massive outflows, but that's something we might witness over time, Snyder commented.

Edited by Jonathan Stoker