Analyst Identifies Key Drivers for Bitcoin ETF Demand

The inclusion of spot Bitcoin ETFs by major platforms and the approval of options based on them are expected to be “powerful catalysts” for demand by the year’s end, according to Bloomberg analyst Eric Balchunas, as reported by The Block.

Currently, exchange-traded funds are not available to clients of RIA platforms managing $7-10 trillion in assets. Balchunas anticipates this will change in the coming months.

“It’s like putting a product on the shelf of a major store,” he remarked.

Balchunas also noted that major institutions such as Raymond James and LPL have shown interest in the new ETFs, with others likely to follow.

Regarding Bitcoin options, the analyst suggested September as a probable approval date. In January, Balchunas’s colleague, James Seyffart, indicated a different potential approval window—from February 15 to September 21, 2024.

“These two powerful catalysts are still ahead. Not to mention the halving, which could lead to a price surge. It’s a small miracle that issuers have managed to spark interest in the instrument without active marketing, major platforms, and options,” commented Balchunas.

The analyst predicted banks would launch structured products based on ETFs. Another likely instrument is a double-leveraged exchange-traded fund. Such leveraged assets could gain significant popularity, he added.

According to Balchunas, the next wave of innovations might include ETFs with “covered call” strategies like “long Bitcoin/short gold.”

“They are going to experiment and will find several ‘hits’. All this will fuel the ecosystem. There will certainly be all sorts of structural and packaged deals forming around the ten main Bitcoin ETFs we see today,” concluded the expert.

According to SoSoValue, on March 13, the total net inflow into products was $683 million. 

According to SoSoValue, on March 13, the total net inflow into Bitcoin spot ETFs was $683 million. The Grayscale ETF GBTC saw a net outflow of $276 million in a single day. The Bitcoin spot ETF with the highest single-day net inflow was BlackRock’s ETF, IBIT, with a net inflow of… pic.twitter.com/3CdXdkaGID

— Wu Blockchain (@WuBlockchain) March 14, 2024

Investors withdrew $276 million from Grayscale’s GBTC, while BlackRock’s IBIT received $586 million. Since the approval of the instrument on January 10, inflows have totaled $12.03 billion.

Michael Saylor, founder of MicroStrategy, has stated that spot exchange-traded funds based on the first cryptocurrency have accelerated the adoption of digital gold among institutions. 

Previously, ForkLog reported on the provision of product access upon request for clients of Bank of America and Wells Fargo.

Earlier, media outlets reported that Morgan Stanley had initiated due diligence regarding the addition of spot Bitcoin ETFs to its brokerage platform.