ETF Chatter Pumps Up Digital Asset Market – Who Has Applied?

One week ago, the digital asset market was floundering as it processed a growing list of enforcement actions against centralized exchanges and a variety of altcoins being deemed securities. However, any uncertainty on whether the market would go up to down quickly dissipated when it was announced that Blackrock had officially filed to launch a Bitcoin Trust that would function similarly to a spot ETF. In the one week since this filing, BTC has spiked in value, sentiment has skyrocketed, and a spat of filings from rival investment firms has followed.

Who Has Applied?

Now that Blackrock has filed its proposed iShares BTC Trust, a possible blueprint for approval has been shared. The result? An influx of similar filings built around Blackrocks approach as competitors look to keep pace. The following are a few examples of this from the past week.

• Blackrock iShares Bitcoin Trust
• Bitwise Bitcoin ETP
• Invesco Galaxy Bitcoin ETF
• Valkyrie Bitcoin Fund
• WisdomTree Bitcoin Trust

Notably, the filings put forth by Wisdom Tree, Invesco, and Bitwise are not new submissions but rather reactivations of old ones, as Blackrock has now laid out a potential blueprint for approval. Looking forward, it is widely expected that Fidelity will be the next major investment firm to submit an ETF filing of its own.

While the aforementioned filings may represent a step forward for BTC with regard to institutional adoption, this really only pertains to the United States. Travel north, cross the world's longest shared land border, and investors will find that Canadian regulators have long since approved multiple Bitcoin Spot-ETFs.

• Purpose Bitcoin ETF
• Evolve Funds Group Bitcoin ETF

Influential, But Not All-Powerful

Part of the reason for the ongoing excitement is not just the fact that ETFs are being filed. Rather, it is the companies doing the filing. More specifically, it is due to Blackrock – the world's largest asset manager, responsible for nearly $10T.

It is important to remember that, while influential, Blackrock is not all-powerful. There is a scenario that may play out that many are not talking about, in which the SEC denies each of the applications, as it has done many times before. While this may appear slim due to Blackrocks 575-1 record of approvals, the possibility remains.

Market Effect

For anyone following the price action of digital assets over the past week, the market effect of these Trust and ETF filings has been made clear; they have been met with resounding positivity resulting in a ~21% gain for BTC over this period of time.

7-Day BTC/USD

This price rise has trickled down to the rest of the market as well, with a select group of assets believed to be commodities leading the way (i.e., Litecoin, Ethereum, Bitcoin Cash).

Beyond individual asset prices, there has been another notable beneficiary of this recent surge in positivity – Grayscale. For ages now, the Grayscale Bitcoin Trust (GBTC) has traded at a discount to its underlying value due to the fact that the product does not support redemptions. With the recent spat of ETF filings, though, optimism has been renewed that the SEC will soon be swayed and allow for Grayscale to convert its Trust to a spot ETF. In doing so, redemptions would then be supported, and any discount would evaporate in short order as traders capitalize on any potential arbitrage opportunity.

Final Word

The reason for the market pumping as a result of these fillings is a simple one. There is a massive amount of wealth in the United States controlled by institutional investors. Up until now, there have been few avenues through which exposure to the digital asset sector could be attained with acceptable levels of risk – meaning that this wealth has remained on the sidelines.

The reasons for sitting on the sidelines until now are varied, including regulatory clarity, market maturation, public demand, and more. With many of these hurdles now cleared, a path forward has been opened allowing for pension funds, institutions, and wealthy investors looking for hands-off exposure to the market.

With Bitcoin (BTC) reaching the heights it already has off the backs of almost purely retail investors in a restrictive environment, it is no wonder that markets are reacting positively in the wake of true institutional adoption.

Now whether this is a good thing for the adoption and ethos of Bitcoin is a different question altogether. For now, the demand for BTC should continue to skyrocket in the coming months, and the total BTC will, as always, remain fixed.  Time will tell what this means for the price of BTC.