The possibility of a Bitcoin spot Exchange Traded Fund (ETF) launching in the US, which has gained much attention over the past months, has again made headlines due to Bloomberg ETF analyst Eric Balchunas’s recent suggestions.
According to the analyst, should the US Securities and Exchange Commission (SEC) approve BlackRock’s Bitcoin spot ETF, a vast pool of $30 trillion capital overseen by US financial advisors could be directed toward Bitcoin investments.
Notably, Balchunas clarified that while the approval of a BTC spot ETF could serve as an accessible pathway for the $30 trillion managed by financial advisors to flow into BTC investments potentially, it is not particularly sure if the entirety of the $30 trillion would move into Bitcoin.
The analyst noted that only a fraction of that amount might consider investing. Balchunas noted: “But even if 0.5% of that allocates, it’s $150b.”
Hey I said that a spot ETF will be a bridge to the $30T advisors manage, a very small amt of which may invest, not all 30! But even if 0.5% of that allocates it’s $150b
— Eric Balchunas (@EricBalchunas) September 5, 2023
Aftermath Of A BlackRock’s Bitcoin Spot ETF
It is worth noting that when BlackRock, boasting over $9 trillion in assets under management, lodged its Bitcoin spot ETF application, it didn’t merely mark its entry. It also dramatically tilted the probability scales for an ETF approval.
Before BlackRock stepped into the frame, the Bloomberg expert claimed that the odds of a BTC spot ETF seeing the light of day in the US hovered around a mere 1%. However, after BlackRock’s involvement, Balchunas disclosed in a podcast that the probability surged to 50%.
Their application had consequences. Balchunas observed a subsequent surge in similar applications from renowned entities, namely ARK Investment, Valkyrie, and Fidelity. This underscored BlackRock’s influence and the escalating competition in the space.
Their application triggered a wave of similar filings by other prominent firms such as ARK Investment, Valkyrie, and Fidelity, setting the stage for a highly competitive environment.
Spot ETF Vs. Futures ETF: The Real Potential
The US isn’t entirely unacquainted with BTC ETFs. Bitcoin futures ETFs have already made their mark, albeit in a limited manner.
As it stands, these futures-based ETFs amass roughly $1 billion in total assets under management. A figure that, though impressive, may appear minor in the face of a spot ETF’s potential.
Balchunas went as far as to term the BTC spot ETF the “holy grail.” A product that, if approved, could overshadow existing futures ETFs and charge up the crypto domain in ways so far unseen.
Meanwhile, amid the race to approve a Bitcoin spot ETF, BTC has been in a continuous downtrend over the past week. The asset has dipped below the $26,000 mark, down by 5.7%. Bitcoin currently trades for $25,501, at the time of writing, down by nearly 1%.
Featured image from iStock, Chart from TradingView