Ten bitcoin ETFs began trading on Thursday after receiving approval from the US Securities and Exchange Commission, including one from Ark Invest and 21Shares.
The fund saw first-day trading volumes of nearly 6 million shares, or $275 million — with competing funds from Grayscale, BlackRock and Fidelity seeing more activity.
Read more: Bitcoin ETF volumes exceeded $4.5 billion on the first day of trading
The volumes reflect “pent-up demand” for such products, according to 21Shares President Ophelia Snyder, who spoke with Blockworks in an interview.
“The excitement surrounding US institutions entering the Bitcoin market is justified,” she added. “We expect a second wave of activity in the coming weeks and months as this becomes more widespread.”
Ark Invest and 21Shares first teamed up to launch a spot Bitcoin ETF in 2021. They rebooted their efforts for such a fund last April, before BlackRock entered the race — a move that spurred a slew of other firms to re-introduce.
Read more: The BlackRock bitcoin ETF is outperforming Bitcoin
While Ark specializes in products and research focused on so-called disruptive innovation, 21Shares has operated exchange-traded cryptocurrency products in Europe for years.
Snyder noted that the Bitcoin Spot ETF opens up cryptocurrencies to many investment professionals who were previously unable to invest on behalf of clients.
Nearly 80% of financial advisors said they were either unable to buy cryptocurrencies for clients or unsure if they could, according to a survey published by Bitwise and VetaFi earlier this month. Among those interested in buying Bitcoin, 88% said they are waiting for SEC approval of Bitcoin ETFs.
Snyder added that for many, such funds are unlikely to be approved immediately.
Keep reading for excerpts from Blockworks’ interview with Snyder.
Brickworks: Why is a Bitcoin ETF such a big deal in your view?
Snyder: Most people who manage money in the United States cannot buy cryptocurrencies.
How comfortable is the average real crypto user when making transfers from their hardware wallet? It’s a feeling of panic. It’s not fun. Did you send it to the right place? Did you do the right thing?
That’s when you do it yourself. What happens when you have to do it for someone else to whom you have a fiduciary obligation? How likely are you to do this? You are not (going).
(Financial advisors) have always had two options. You either do nothing, or you use a lot of time and energy to set up a completely redundant system to support spot products.
Because, by the way, none of your existing systems will be integrated, right? Cryptocurrency reporting, crypto taxes, crypto trading, crypto custody, crypto compliance – it’s a whole different operating set.
Their mission is to serve their customers. Their task is not to spend a lot of time creating additional infrastructure.
So they won’t buy spot (Bitcoin) outside of that infrastructure. They certainly won’t buy it individually (customers). There is no practical way for them to enter this space while remaining within their infrastructure.
Brickworks: What is your estimate of the short- and long-term demand for these elements of flow and assets under a management perspective?
Snyder: Anyone with a guard of any kind should not buy on day one.
Most large platforms have a gatekeeper. They do a review, they do due diligence on the manager. There is a set that needs to happen; This process takes weeks.
So I think this focus on short-term flows is crazy short-sighted and largely off the mark.
Having done this in Europe, what we’ve seen in the past is people dipping their toes into this. They tried it out a little bit to see how it works, see how it works, see what it’s like to have a wallet and how a customer interacts with it. Then they go up.
Read more: Financial professionals consider boosting allocation to ‘chaos-resistant’ BTC: Bitwise
It will increase over time, so I think the short-term view is wrong. I think they’re going to do very well in their first week — which doesn’t mean I don’t believe in that — but I think the really transformative things that are going to change the way our industry looks at these things are going to take a little more time.
Brickworks: We’ve seen several cryptocurrency-focused marketing efforts in recent weeks from rival companies like Bitwise, Hashdex, and VanEck. How are Ark Invest and 21Shares looking to position their brand?
Snyder: Really, we want to bring new people into the fold here. That’s the point.
If you look at how our competitors positioned (themselves), there was a lot of emphasis on the “coding is cool, be one of the cool kids” type of marketing. One of the issues with that is that we don’t want people to engage in FOMO in these investments.
You want them to feel confident, comfortable and welcome in our community. That’s a big part of this.
So our messaging is actually to look at people who are a little bit more curious about cryptocurrencies. If you don’t know all of these things, that’s okay – let us help you. I’ve been running products for five years, and Ark has been looking at products for 10 years in the cryptocurrency space.
The tagline is “a little curious,” because that’s the point. We want people who are interested in our space to see value in it, but are nervous about feeling confident and welcome.
This is not about Do you know what “GM” means? It doesn’t matter. that’s not the point. We want you to see the vision for our technology, the vision for what cryptocurrencies can do, and the vision of Bitcoin as a new way to think about money.
Brickworks: Ark Invest and 21Shares filed for an ether ETF in September. With the Bitcoin Spot ETF now approved, when do you expect the Spot Ether ETF to hit the market?
Snyder: Spot ETH is actually a completely different animal.
I think what you’re going to look at is where the current market construction of Ethereum and the current market construction of Bitcoin diverge, because that’s a lot of meat on 19b-4, a lot of meat on how these decisions are made.
Obviously we’re really excited to continue engaging with the regulator on that. We wanted to have those conversations, so we’re looking forward to the next six months on that.
This interview has been edited for clarity and brevity.
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