According to Bloomberg Intelligence estimates, if approved, the US spot Bitcoin ETF market has the potential to grow into a $100 billion juggernaut over time. Analysts suggest that new money, particularly those looking to buy and hold over longer time periods, will be attracted to a spot product, which is also likely to be cheaper and more efficient than the current futures ETFs on US exchanges.
While Bitcoin-futures ETFs have received a warm welcome as they marked a watershed moment for the crypto industry, they have trailed Bitcoin’s rally this year. The expense associated with rolling over specific futures contracts as they expire has eaten into returns, causing the funds to become unmoored from the asset they track.
With spot ETFs more likely than futures-based ones to be a reflection of real-time supply and demand, their introduction may cause “migration of trading activity and liquidity” away from Bitcoin futures markets in the US. Proponents are optimistic that the heft of the issuers involved and Grayscale’s recent court win may finally tilt the odds in favor of these funds being approved.
Investors seeking exposure to Bitcoin have the option of the ProShares Bitcoin Strategy ETF, the largest Bitcoin-linked ETF with an average daily trading volume of nearly $135 million in 2023, putting it in the top 5% of all US ETFs. However, if spot-based ETFs are approved, Bitcoin ETFs could see significant outflows from futures-based ones.
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