- Reggie Browne’s projection: Bitcoin ETFs might command an 8% premium if approved.
- Challenges ahead: Trading complexities and SEC’s caution on spot Bitcoin.
- Anticipated surge: Browne predicts $2B+ inflow within 30 days, $10B-$20B throughout the year.
In a recent report from Bloomberg, Reggie Browne, the head of ETF trading at market-maker GTS, has offered intriguing insights into the potential trading dynamics of a Bitcoin ETF, pending approval this Wednesday.
Browne suggests that if approved, ETF applications from asset managers might experience a noteworthy premium to their net asset value (NAV), with estimates reaching as high as 8%. This projection contrasts with the ProShares Bitcoin Strategy ETF (BITO), which, holding Bitcoin futures, has maintained a mere 0.02% premium over the past year.
However, Browne emphasizes the intricacies of trading spot Bitcoin directly, highlighting potential challenges for ETF price alignment with the underlying Bitcoin. This analysis comes just ahead of the Securities and Exchange Commission’s (SEC) impending deadline to decide on multiple spot Bitcoin ETF applications.
Browne anticipates that a spot-Bitcoin ETF, if approved, could command a significant premium above its NAV, reflecting investors’ willingness to pay extra for the convenience, accessibility, and regulated nature of an ETF structure. Nonetheless, he raises concerns about the SEC’s reluctance to permit broker-dealers to trade spot Bitcoin directly, potentially necessitating the use of Bitcoin futures for hedging.
If approved, Browne predicts substantial investor interest, estimating a minimum addition of $2 billion to spot Bitcoin ETFs within the initial 30 days of trading. He further envisions these ETFs attracting $10 billion to $20 billion in investments throughout the year, underscoring the potential demand for a regulated Bitcoin investment vehicle and the significant assets that could flow into the market.
At the time of reporting, Bitcoin is holding steady at $46,600, consolidating above this level after reaching a 20-month high of $47,100 on Monday. While the cryptocurrency has experienced slight sideways movement with a 0.2% decline in the past 24 hours, it remains well-positioned to breach the $50,000 mark if positive news regarding the long-awaited index funds emerges from US regulators.
The impending SEC decision on Wednesday leaves three possible outcomes: rejection, delay, or approval. Despite varying opinions, most, including the ETF applicants, anticipate approval as the most likely scenario. The market eagerly awaits the SEC’s decision, recognizing its potential to profoundly impact Bitcoin’s future trajectory.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.