According to NYDIG’s latest research, spot Bitcoin exchange-traded funds (ETF) can trigger a massive $30 billion influx in demand. The race for launching a Bitcoin ETF is heating up, with major players like BlackRock (BLK) and Fidelity Investments filing for regulatory approvals.
Bullish Outlook For Bitcoin ETF
In its latest report, the financial giant highlights the remarkable recognition and extensive appeal a spot BTC ETF filing by BlackRock and the iShares franchise has brought to the leading digital asset. Additionally, the report sheds light on the ease and familiarity of purchase and sale methods of these products through securities brokers.
It explained why it is a game-changer for investors seeking simplified position reporting, tax reporting, and risk measurement. Spot Bitcoin ETFs are designed to offer better investment exposure than existing alternatives.
The NYDIG report also disclosed that asset managers have $27.6 billion of spot ETFs under management. It is also estimated that these managers have $28.8 billion in BTC under their management.
Meanwhile, some finance analysts refer to Bitcoin as “digital gold” due to its similarities to the precious metal. The recent rise in BTC ETF filings means that comparisons to the famous gold ETFs in the early 2000s have become inevitable.
The NYDIG’s report revealed the striking disparities between these modern-day investment instruments. Moreover, NYDIG’s analysis highlights a significant contrast in the market penetration of gold ETFs and Bitcoin funds.
The report also indicated that gold ETFs account for 1.6% of the total supply circulation of gold worldwide, with 17.1% held by central banks. On the other hand, Bitcoin ETFs have 4.9% of the entire Bitcoin supply, indicating a growing interest in the digital asset among investors.
Nevertheless, Gold funds have attracted nearly $210 billion in investments, reflecting the steady appeal of the precious metal. In comparison, investments in Bitcoin funds are relatively small at about $28.8 billion, but their growth path indicates increasing investor interest in cryptocurrencies, especially BTC.
Assessing Bitcoin’s Limitations
Per NYDIG’s analysis, Bitcoin is approximately 3.6 times more volatile than gold. This volatility is a factor that investors consider when they determine whether to include this digital asset in their investment portfolio.
The report added that investors would require 3.6 times less BTC than gold (based on the dollar) to achieve the same level of risk exposure. Hence, this analysis underscores the investment potential of Bitcoin and how it is valuable for investors willing to diversify investment portfolios.
Besides the NYDIG, the renowned newsletter Econometrics has also suggested a cautious take on Bitcoin ETF. According to the newsletter, the GLD ETF’s transformative impact on the market has been phenomenal.
The Econometrics highlighted how this innovative investment vehicle successfully solved a crucial market need by offering investors a product that accurately tracked the price of physical gold. Launched at a time when investors seek ample exposure to gold’s price movements, GLD ETF was pivotal in providing such exposure to this precious metal.
Its emergence marked a turning point in the investment landscape, empowering investors to participate in gold markets without the complexities associated with physical ownership. However, the newsletter opined that a spot BTC ETF would attract more inflows into the system but would not push the value of Bitcoin to over $100,000.
