Why Some Brokerage Firms Are Blocking Access to Spot Bitcoin ETFs - Ep. 594
Jan 12, 2024
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Nate Geraci, President of The ETF Store, Eric Balchunas, Senior ETF Analyst at Bloomberg Intelligence, and James Seyffart, Research Analyst at Bloomberg Intelligence, dive into the exciting launch of spot Bitcoin ETFs. They discuss record trading volumes and the intriguing mechanics behind these funds. The trio analyzes why some brokerages are restricting access to ETFs and the marketing genius behind BlackRock's strategy. Plus, they share insights on the future of Ethereum spot ETFs and how trading dynamics could evolve in this new crypto landscape.
Strong trading volume and high demand for spot Bitcoin ETFs have been observed since their launch.
The legitimacy of spot Bitcoin ETFs is established through tight trading spreads and significant trading volume.
Different investment strategies and options are expected to be offered through additional spot Bitcoin ETFs.
Registered investment advisors (RIAs) are predicted to embrace spot Bitcoin ETFs to cater to aggressive and younger investors.
Mainstream adoption of Bitcoin may eventually impact the need for spot Bitcoin ETFs.
Various news in the crypto industry includes Circle's IPO filing, rejection of a Bitcoin anti-spam proposal, mysterious transaction to Satoshi's Genesis Wallet, and more.
Deep dives
The launch of spot Bitcoin ETFs
The first-ever spot Bitcoin ETFs have been approved by the US Securities and Exchange Commission (SEC) and have begun trading. Market observers have noticed strong trading volume and high demand for these ETFs, with total trading reaching billions of dollars. Various issuers are expected to launch additional spot Bitcoin ETFs, offering different investment strategies and options.
Reactions and observations from experts
Experts in the ETF industry have shared their observations and insights regarding the launch of spot Bitcoin ETFs. They have noted the tight trading spreads and the significance of trading volume in establishing the legitimacy of this new category. While analyzing the impact of existing asset managers in the Bitcoin ETF space, experts are anticipating the emergence of various spot Bitcoin ETF offerings that cater to different investment preferences, including leveraged and inverse options.
The future outlook for Bitcoin ETFs
Looking ahead, industry experts predict that the spot Bitcoin ETF market will continue to grow steadily. They expect more registered investment advisors (RIAs) to embrace these ETFs as part of their investment strategies, catering to both aggressive and younger investors. While mainstream adoption of Bitcoin ETFs is gaining momentum, it is also anticipated that major brokerage platforms like Schwab and Fidelity may eventually offer direct exposure to Bitcoin, potentially impacting the need for spot Bitcoin ETFs.
Circle files for IPO in the US
Circle, the issuer of USDC stablecoin, has filed for an initial public offering in the United States. The move comes after a failed attempt to go public in 2022 through a merger with a SPAC. The filing indicates Circle's push to become an independent public company.
A controversial proposal by Bitcoin developer Luke Dashjr to filter out NFTs on the Bitcoin blockchain was rejected by the Bitcoin community. Dashjr argued that ordinals exploit vulnerabilities and network congestion. The proposal faced criticism and was terminated without action.
1.2 million in Bitcoin sent to Satoshi's Genesis Wallet
A mysterious transaction involving 1.2 million in Bitcoin was sent to the Genesis Wallet associated with Bitcoin's creator Satoshi Nakamoto. The funds originated from Binance and underwent multiple transfers. The intent behind the transaction is subject to speculation.
North Korea's Lazarus Group shifts 1.2 million in Bitcoin from coin mixer
The North Korean hacking syndicate Lazarus Group moved $1.2 million worth of cryptocurrencies via a coin mixer. This represents ongoing crypto theft operations, which are a significant source of funding for North Korea.
DCG creditors dispute repayment
Digital Currency Group (DCG) has faced opposition from a group of Genesis creditors who claim that DCG owes approximately $26 million in unpaid interest and late fees. The dispute centers on the nature of a repayment, which involved liquid instruments.
Ripple announces $285 million equity repurchase, increasing valuation to $11 billion
Ripple Labs has initiated plans to repurchase $285 million of its shares, propelling its valuation to around $11 billion. The buyback is limited to a maximum of 6% per stakeholder and follows a recent legal victory against the SEC.
FTX aims to sell luxury Bahamian properties
FTX seeks court approval to sell luxury real estate properties in the Bahamas as part of a repayment plan for customers and creditors. The settlement involves the sale of beachfront homes and condos acquired by FTX before its collapse.
CFTC focuses on DeFi, Blockchain Association rebuts Warren's critique
The CFTC's Technology Advisory Committee voted on a comprehensive DeFi review, aiming to enhance understanding and regulation of decentralized finance systems. The Blockchain Association responded to Senator Elizabeth Warren's critique by clarifying the diverse backgrounds of crypto industry professionals. The association opposed legislative efforts to regulate crypto.
Apple removes major exchange apps following government directive in India
Apple has removed several offshore cryptocurrency exchange apps from its app store in India after the Indian Financial Intelligence Unit issued notices to nine exchanges for non-compliance with money laundering laws. The government has also directed the Ministry of Information Technology to block URLs of these exchanges.
Weekly news recap
This week's crypto news includes Circle's IPO filing, the rejection of a Bitcoin anti-spam proposal, a mysterious transaction to Satoshi's Genesis Wallet, Lazarus Group's Bitcoin transfers, DCG's creditor dispute, Ripple's equity repurchase, FTX's planned property sales, CFTC's focus on DeFi, the Blockchain Association's response to Senator Warren, and Apple's removal of exchange apps in India.
Unless you've been living under a rock, you probably heard that spot Bitcoin ETFs were finally approved by the SEC this week. That set the stage for 11 such offerings from the likes of BlackRock, Fidelity, and ARK 21Shares to begin trading on Thursday. On this episode of Unchained, Nate Geraci, president of the ETF Store; Eric Balchunas, senior ETF analyst at Bloomberg Intelligence; and James Seyffart, research analyst at Bloomberg Intelligence discussed the initial record trading volumes, the mechanics of how the funds work, the botched roll-out process, the pointed commentary from SEC commissioners, the potential for future Ethereum spot ETFs and predictions for total inflows. Plus, they explain why brokerage firms like Vanguard, Merrill and others were blocking customer access to the ETFs.
Show highlights:
The initial impact and trading volumes on the launch day of the ETFs
How BlackRock’s ETF, IBIT, had a lot of volume in pre-market and what that means
Why Eric was surprised that BlackRock proceeded with a waiver for its ETF, but realized that it was “genius marketing”
Whether there’s a problem that ETFs don’t trade 24/7, unlike BTC itself
Why James says the spot ETFs are not going to have significant premiums or discounts to NAV
What the percentage premium is and how it will play out with spot Bitcoin ETFs
Whether the SEC will ever allow in-kind creation and redemption
Why Nate and Eric believe that the SEC’s denials of spot Bitcoin ETFs for a decade was “completely suboptimal” for retail investors
How the SEC commissioners pointedly disagreed with each other in their comments and dissents
The politics of the approval process
Whether Ethereum spot ETFs will be approved next
Why some big platforms and brokerages are not offering the spot Bitcoin ETFs
How RIAs will respond to the ETF and whether there’s going to be mainstream adoption by advisors
