Bitcoin ETFs witnessing this major issue after knocking $7B inflows in just 2 months
The introduction of new spot bitcoin Exchange-Traded Funds (ETFs) has made a huge buzz in the financial markets. These funds had seen more than $7 billion in combined inflows within two months of getting a US Securities and Exchange Commission (SEC). However, top analysts and experts had termed it as the “Cointucky Derby”.
Bitcoin ETFs to race up now?
According to the reports, even after gaining historic approval from the US SEC, most ETF providers like BlackRock and Fidelity have yet to generate profits from these products. It has come to focus that many of these top players have waived fees for early investors. This includes fee increases slated for the future or upon reaching specific asset thresholds.
However, Grayscale Investments’ bitcoin ETF stands out with its 1.5% expense ratio. It is expected that the long-term profitability of these ETFs linked to their acceptance by fund analysts and financial advisers as they are the ones who are responsible for incorporating them into client portfolios.
The report mentions that the due diligence process for ETFs involves evaluating both the investment case for the fund’s assets with its operational integrity. Analysts, like Friederich, note an increase in complex results from innovative products in the ETF space.
Dealing with these complexities, some experts remain optimistic about the approval prospects for spot bitcoin ETFs. Investor analyst Rich Kerr, from K&L Gates, suggests that these products that are tracking the price of bitcoin, may be simpler to understand and approve compared to complex derivative strategies.
What’s the issue?
As there is traditional due diligence required for a lengthy performance record, some Bitcoin ETF issuers believe they can bypass this requirement. They believe that they can do this by citing the prior existence of similar funds before the SEC’s approval of spot funds.
Steve Kurz, from Galaxy, notes that the remaining uncertainty lies in operational aspects, such as ETFs’ management of bitcoin holdings and share creation and redemption processes.
Bagging an ETF approval eventually helped Bitcoin to register massive gains. BTC price is easily up by 68% in the last 60 days. However, the world’s biggest asset’s price saw a minor correction over the past 7 days as its price dropped by 2%.
Bitcoin price is up by around 3% in the last 24 hours. It is trading at an average price of $66,959, at the press time. Its 24 hour trading volume is up by 28% to stand at $29.5 billion.
