Financial advisors are assessing their strategies regarding bitcoin exchange traded funds now that they have been approved by the Securities and Exchange Commission, InvestmentNews reports.
Last week, the SEC voted to approve nearly a dozen new bitcoin ETFs, allowing them to be sold to the public for the first time to give investors an asset that will closely track the price of bitcoin.
The SEC’s action covered 11 applications from asset managers, including from BlackRock, Fidelity, VanEck, and Ark Investments/21Shares, and the funds began trading in U.S. markets last Thursday.
Matthew Sigel, head of digital assets research at VanEck, told InvestmentNews he was encouraged by how the bitcoin ETFs were trading in the first days in the market. “The bid-ask spreads have come down a lot,” Sigel said. “They’re trading at very minimal discounts or premiums to NAV, and there’s plenty of volume for advisors to get access.”
The VanEck Bitcoin Trust ETF (HODL) closed at $52.92 after its first day of trading last Thursday before dropping 8% to $48.46 over the following week.
Sigel said those buying the fund in the early stages were mostly speculators but he expects advisors to make it a more consistent element of investment portfolios as clients grow more accustomed to having cryptocurrency as an investment. He estimated investors could see significant savings by using bitcoin ETFs instead of making retail transactions with online cryptocurrency platforms.
“We expect that over the course of this year, brokerages and banks will increasingly come out with asset allocation models that incorporate bitcoin, perhaps taking 1 to 3 percentage points out of the fixed-income bucket into this store of value with a fixed supply, not subject to the money printing of the Federal Reserve,” he said.
Marketwatch reported Thursday that bitcoin had dropped nearly 20% in the last two weeks, though some analysts remained optimistic that the currency could still reach an all-time high by the end of the year. The price of bitcoin had risen over 70% since October amid speculation that the ETFs would gain SEC approval.
It was reported that BlackRock’s iShares Bitcoin Trust made up nearly half the inflows to spot bitcoin ETFs since the asset was approved by the SEC.
The new ETFs will be listed on Nasdaq, the New York Stock Exchange and the Chicago Board Options Exchange, which are all highly regulated exchanges.
Investors can buy and sell bitcoin ETFs in the same way they trade stocks, and will be able to gain profits from the cryptocurrency without the risks of directly owning it.
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