Interest from major banks and brokers in Bitcoin is “increasing,” says ETF issuer VanEck

The appetite for Bitcoin According to Mathew Sigel, Head of Digital Assets Research at VanEck, the trend is “accelerating” among major financial institutions, including banks and brokerage firms, as more of their clients show interest in Bitcoin ETFs.

And the more institutions consider these offers, the greater the chances of further acceptance of this new asset class.

“We don’t see obstacles, we see opportunities,” Sigel said in an interview with Decipher.

Bitcoin's relationship with Wall Street has gone through various phases, from icy indifference to keen interest in the cryptocurrency's potential. Now that Bitcoin spot exchange-traded funds are on the market – including VanEck's Bitcoin ETF “HODL” – the relationship could be heating up again as more institutional clients express interest in investing in these funds.

By any measure, the performance of Bitcoin spot ETFs has been a historic success. On the first day of trading alone there were $4.5 billion trading volume, a massive start by any measure. Already three of them – BlackRock, Fidelity and most recently 21Shares from Ark Invest– have already accumulated more than $1 billion in assets, with BlackRock alone currently holding just over $1 billion over $5 billion.

VanEck, whose spot ETF was among the 10 ETFs approved by the Securities and Exchange Commission according to data from VettiFi.

Sigel called the ETF's market entry an “overwhelming overall success” given the record-breaking inflows it has attracted. These inflows drove Bitcoin's price higher, but were curbed by outflows from Grayscale following its conversion from a trust to a spot ETF. With these drains seems to be slowing down nowSigel said it opened up “the potential to exceed expectations.”

Many of the trades executed were focused on retail, Sigel said, consistent with reports from other ETF issuers and analysts. However, Sigel added that there have been discussions with banks and wirehouses to begin offering spot ETFs to clients in response to increased demand.

“Institutions like these have been slow to offer these products to the discretionary portion of their clients’ portfolios unless specifically requested to do so,” Sigel said. In a sign of the demand to get into Bitcoin, a survey of financial advisors was published by Co-ETF issuer Bitwise on Jan. 4 found that 88% of respondents expressed interest in purchasing Bitcoin on behalf of their clients once an ETF became available.

Competition among ETF issuers was particularly fierce, with ten players including Wall Street heavyweights such as BlackRock and Fidelity. This has prompted some of them to do so Reduce fees up front from and after the ETFs came online to outperform each other.

The downside to these cuts is that they can affect profitability for issuers that may currently be in arrears. Sigel, whose firm has a 0.25% fee comparable to its competitors, said he sees current rates as “very competitively priced” and should not be a barrier to further adoption.

Instead, Sigel said the important metric to keep an eye on is the Price of Bitcoinwhich will play a role in how profitable an ETF will be in the future.

“ETF issuers are unlikely to close an ETF that has doubled in price,” Sigel explained. “So we will have to wait and see whether custody and other costs come down before considering further price reductions.”

The Price of Bitcoin is currently at $52,480, its highest level since the last major price rally at the end of 2021.

Edited by Guillermo Jimenez

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.

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