A bitcoin exchange traded fund (ETF) could be on the cards in 2021.
That’s according to Eric Balchunas, Bloomberg’s “top” Intelligence ETF Analyst as reported by the organization on Tuesday.
“The institutional adoption of crypto is much greater,” said Balchunas when asked why he thought 2021 was different to the last bull run in 2017 and 2018. “You have the intense growth of ‘default’ crypto products like [Grayscale’s Bitcoin Trust] which are not ideal for retail investors and the SEC knows this.”
ETFs are a type of fund traded on exchanges that operate in a similar fashion to mutual funds and can be bought and sold throughout the daily trading period. Grayscale is owned by CoinDesk’s parent firm Digital Currency Group.
Balchunas also pointed to Canada’s financial ecosystem, which green lit its first bitcoin ETF in February, which he noted at the time was a “good sign” the U.S. would follow suit.
So far, Canada has approved four bitcoin ETFs. By comparison, the U.S. has yet to approve an ETF for any cryptocurrency despite multiple applications spanning a number of years.
“Canada has a history of being like six months to a year ahead of the U.S.,” said the analyst.
Further, the Canadian ETFs have seen notable success, with Balchunas labeling the demand from investors as “insane.” Indeed, within the first two days of trading of Purpose Investment’s ETF, Canada’s first, the fund collected over $420 million in assets under management. All four ETFs have garnered $2.3 billion in assets in just three months, he added.
Balchunas also pointed toward Gary Gensler being appointed to chair the U.S. Securities and Exchange Commission, providing with it a wealth of experience in fintech and a presumably favorable stance toward crypto since he has taught classes on the topic at MIT.
Though the analyst conceded, amid the backdrop of the Robinhood/Gamestop debacle earlier this year, Gensler may have “bigger fish to fry.” That could ultimately lead to a delay in the approval of a U.S.-sanctioned bitcoin ETF, said Balchunas.
But, he said, “the longer they delay the more they will effectively play kingmaker as whoever is out first is instantly wealthy. So I think there’s a risk of waiting too long and I think they understand that.”
According to Balchunas, there’s been a “shift” this year, meaning his team is “more optimistic of an approval than we’ve ever been.”
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