Bernstein: A Spot Bitcoin ETF Could Help Kick-Start a New Crypto Cycle

Approval of a spot exchange-traded fund (ETF) based on the first cryptocurrency would bring fresh capital to the digital assets market and lay the groundwork for retail and institutional investors to enter. This is according to a Bernstein report, CoinDesk reports.

Analysts say that cryptocurrency ETFs would benefit from “strong marketing by leading global asset managers” and “capital flows from retail brokers and financial advisers”.

The Bernstein team noted that capital to fuel a new market cycle would come from fresh supplies of stablecoins, tokenisation of traditional assets and the development of the blockchain infrastructure itself.

“Thanks to the interest of leading global asset managers in spot Bitcoin ETFs and potential ways to address objections from the U.S. Securities and Exchange Commission (SEC), the probability of approval has risen,” the experts write.

Bernstein expects the spot Bitcoin ETF sector to capture 10% of the total asset capitalization in the first two to three years.

On June 15, BlackRock submitted a filing to the SEC for a spot Bitcoin ETF. Subsequently, similar filings were submitted by Valkyrie, Fidelity Investments, WisdomTree and Invesco.

Later the Commission returned all filings, as they lacked sufficient information regarding the so-called joint surveillance agreement or the details of this mechanism.

Subsequently, the aforementioned companies promptly sent the agency updated proposals. On July 14 the regulator took up for consideration proposals from BlackRock, VanEck, Invesco, Fidelity Investments and WisdomTree.

The Chicago Board Options Exchange also amended the document to launch ARK 21Shares, including a joint surveillance agreement to prevent fraud and market manipulation, copying part of BlackRock’s application. On August 11 the SEC extended the review of this application.

Earlier Bernstein stated a high likelihood of approval for spot Bitcoin ETFs. Experts noted that the regulator has already approved exchange-traded funds based on digital gold, including leveraged ones from Volatility Shares.

Former SEC chairman Jay Clayton also shares the view.

However former agency lawyer John Reed Stark believes the Commission will not approve a Bitcoin ETF for a number of weighty reasons. In his view, the outcome could be altered by the election of a Republican candidate in the presidential race.

Earlier, ARK Invest CEO Cathie Wood and Matrixport analysts forecast a favorable ruling on several applications.