The world’s largest asset management company BlackRock made headlines last month by filing a spot Bitcoin ETF application with the US Securities and Exchange Commission (SEC). This move sparked a rise in interest in Bitcoin investment products. New York Digital Investment Group (NYDIG) recently released a research report exploring the potential game changing effects of a spot Bitcoin ETF approval in the US market.
Current Status of Spot Bitcoin ETFs and their Benefits
While spot Bitcoin ETFs are already available as investment products in several different locations around the world they have yet to be introduced in the US market. According to NYDIG’s research the total value of assets invested in Bitcoin investment products worldwide is estimated to be around $28.8 billion with $27.6 billion coming from spot investment products.
As a result of the participation of well-known companies like BlackRock and iShares as well as greater investor protection NYDIG underscores the main advantages of a spot Bitcoin ETF. The research also mentions that using brokers is anticipated to make it simpler to trade, record positions, closely watch risk and pay taxes. A spot Bitcoin ETF is probably going to offer better liquidity, fewer tracking errors and perhaps lower costs than alternative choices like private funds or trusts .
Bitcoin and Gold Comparison and Potential Inflow
In an interesting comparison between Bitcoin and gold NYDIG points out that only $28.8 billion has been invested in Bitcoin funds compared to over $210 billion in gold ETFs worldwide . Bitcoin is not yet as popular or held by many central banks as gold but its supply is held in various funds to a greater extent (4.9%) than that of gold (1.6%). According to NYDIG the approval of a spot Bitcoin ETF could lead to an increase in Bitcoin value of about $ 30 billion.
Differing Opinions on the Impact of Spot Bitcoin ETFs
While NYDIG is optimistic about the potential positive impact of a spot Bitcoin ETF some market players hold a different view. JPMorgan released a report stating that spot Bitcoin ETFs may not have as significant an impact on the market as anticipated . They argue that spot Bitcoin ETFs have not performed exceptionally well in overseas markets and see no reason why they would fare differently in the US.
BlackRock’s filing of a spot Bitcoin ETF application has generated significant interest in Bitcoin investment products . NYDIG’s research report highlights the potential benefits of a spot Bitcoin ETF including improved investor protection, increased confidence and better trading capabilities.