With Bitcoin (BTC) spot ETFs seemingly just weeks away, some crypto investors are curious whether asset managers like BlackRock can “advance” their approvals using insider knowledge before their highly anticipated funds hit the market.
In an X-Space on Friday, Bloomberg ETF analyst James Seyffart clarified what BlackRock can and cannot do with the Bitcoin market before approval – and how they will handle customer demands.
BlackRock’s BTC position
According to Seyffart, ETF applicants will only start buying BTC a few days after the actual launch of their fund. This is done to provide the ETF with funds in advance so that it is ready to sell shares to investors once it is operational.
“It’s not like they’re out there buying Bitcoin on their balance sheets just to maintain their exposure,” Seyffart said. “I think there’s a lot of hype about what they’re doing to get this stuff to the top.”
The analyst clarified that BlackRock may continue to invest in BTC through other private products such as its private Bitcoin trust – especially if its clients purchase BTC before ETF approval.
In fact, inflows into Bitcoin alternative funds – including Canadian Bitcoin ETFs and futures-based funds in the United States – have broken records in recent months on anticipation of an impending approval.
While such ETFs have been rejected time and time again, Seyffart believes this time is different thanks to Grayscale's court victory over the Securities and Exchange Commission (SEC) in August.
“In October, we heard that the SEC was making comments on its S-1 filings,” he added. “We were at 90% then [odds of approval] because it was a complete break from the pattern.”
BlackRock said in its S-1 filing in October that it would raise its fund with $100,000 before launch. However, in an updated filing on Friday, that amount increased to a whopping $10 million, scheduled for January 3rd.
Incoming ETF approval
Given the timing of pending comment periods and approval deadlines for competing applicants, Seyffart and other analysts expect multiple Bitcoin spot ETFs to be approved simultaneously between January 5th and 10th.
Bitcoin derivatives markets are looking bearish ahead of this approval date, suggesting many believe the ETF approval will be a sell-the-news event.
But others – including former NYSE President Tom Farley – believe money will “flow into the industry once an ETF is approved.”
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