Well, the Bitcoin ETF is here. What now?
The debut of the new funds was met with a lot of hype and liquidity, with the second day of trading seeing trading volumes of $3.1 billion, as my colleague RT Watson noted.
Among new Bitcoin spot fund issuers, BlackRock led the way with $564 million in trades on Friday, while Fidelity saw $431 million in trading volume. This is according to Yahoo Finance data compiled by The Block.
Liquidity during these early days will likely be welcomed by issuers and market participants, adding further fuel to this important milestone in the asset class maturing and gaining acceptance among Wall Street giants.
Advocates of this financial instrument predicted that it could replicate the impact of the first gold ETF on the precious metal, opening Bitcoin to a broader base of investors and sending its price higher.
However, it is important to realize that this change will unfold gradually. Although the ETF represents a pivotal move, it is advisable not to focus too much on flows and volumes in these initial stages, given the deliberate – some might say too slow – pace on Wall Street.
The old saying “if you build it, they will come” is true, but it will take time.
Consider the fact that many market participants, particularly Vanguard, currently prohibit their clients from purchasing Bitcoin ETFs on their platforms. As the world’s largest provider of retirement plans, Vanguard exemplifies the cautious approach taken by major players in the industry. Meanwhile, companies like UBS and Citi only plan to allow “certain” clients to trade Bitcoin ETFs, according to reports from CoinDesk.
Even JPMorgan Chase and Fidelity clients, myself included, encounter a risk disclosure pop-up when placing an order. On the financial advisors front, obstacles remain. I have received letters from several individuals stating that their advisors are either unwilling to provide exposure to Bitcoin ETFs or are completely against adding such exposure. This shouldn’t be too surprising, given that such a product wasn’t even on their radar, according to data compiled by issuer Bitwise. In fact, less than half of advisors expect to start an ETF in 2024. And even when they are ready to make an offer, they will have to start reworking their portfolio mythology, secure approvals from management, and so on. These are months long operations, not long weeks.
Let’s celebrate the acceptance of meaning, but realize that much of the hard work has only just begun.
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