Bitcoin ETFs are not a winner take all, experts say, as influence on crypto exhausts

Bitcoin Exchange Traded Funds (ETFs) have driven the recent cryptocurrency rally. While the hype pumped Bitcoin (BTC) price to as high as $31,000, the influence is fading. Nevertheless, the campaign for approval continues. Key players include BlackRock, WisdomTree, Invesco, Valkyrie, Bitwise, Fidelity, Van Eck, and Ark Invest.

Also Read: Larry Fink creates alignment between BlackRock and the purpose of Bitcoin as the race for ETFs continues

Bitcoin ETFs should be approved, Crypto Twitter

Bitcoin ETFs are the current hype on Crypto Twitter, but not so much for driving crypto prices of late. In a conversation with many angles, the majority wants the US SEC to approve the filings. The driving force for this sentiment is the validation it brings to the cryptocurrency space, not for the people who understand, but for the people who do not.

Popular narratives point to a market that wants to capitalize on the price rally that would ensue upon the SEC’s approval.

Indeed, approval would see investors buy into the ETF without trading Bitcoin itself, thereby eliminating concerns of storage and security procedures characteristic of the crypto industry.  

However, the experts say the real value would be long-term as the interest by institutional investors is merely the beginning of a longer-term story of traditional finance (TradFi) moving into the cryptocurrency space. This is vital given “TradFi and BlackRock are particularly connected to the $30 trillion financial advisors have.” Most of these market players are very comfortable with the ETF structure.

Bitcoin ETFs from sector analysts

A recent interview on Crypto Banter, hosting two experts in the ETF space, revealed key insights worth sharing. The host picked the minds of Eric Baltrounas, Senior ETF analyst at Bloomberg Intelligence, and James Seyfart, a research analyst from the same company focusing on ETFs and funds.

BlackRock presents as the strongest horse in the race, alongside Vanguard, as these are the biggest money managers worldwide, with the latter boasting around $7.7 trillion in global assets, slightly below BlackRock’s $9.1 trillion. Such a heft in assets means an equally expansive distribution network to other money managers.

In layperson language, a win for BlackRock, given its huge asset capacity, would see the ETFs pushed more aggressively down the distribution network.

Bitcoin ETF winner matters

Bitcoin ETF filings currently on the SEC’s desk have several names to them, but once one is approved, chances are high that all will launch. Nevertheless, while different products are launched, there will be differentiated exposures.

Citing the experts, some ETFs will advertise by charging little on the condition that they are allowed to lend out the assets, while others will charge a bit more on the condition that they do not lend out customers’ funds. This means that some applicants will get the bulk of the assets (liquidity) than others. BlackRock is the most dominant player in the asset management space and, even specifically, the ETF space, which means its involvement, would bring more power to the table.

Bitcoin ETFs are not a winner take all

“Bitcoin ETFs are not a winner take all; they are a winner take most,” according to Matt Hogan of Bitwise, meaning that even if all filings launch simultaneously, one will be the center of attention, getting the most assets and trading. Still, there will be plenty of room for other issuers to operate and earn their keep by offering differentiated exposures.

Therefore, it is not about rooting for one particular institution among the filings, but for unlocking most money by going for a player that would bode better for investors. Likening BlackRock and Vanguard ETFs to the International Business Machines (IBM) of this era, Eric and James expect the institutions’ offerings to be good and cheap, and with minimal complaints.

Nevertheless, this does not discredit the position of the other applicants, nor does it make them mere boilerplates in the campaign.

At the time of writing, Bitcoin price is $30,194, inching farther away from the $31,000 high induced by the ETF hype. 

BTC/USDT 1-Day Chart

Unless BTC consolidates around $30,000 and gathers sufficient momentum to spring up through the selling pressure at $31,500, experts speculate a revisit of the $28,000 range, or $25,000 in the dire case.