After a lengthy delay, spot bitcoin exchange-traded funds (ETFs) have finally arrived, with BlackRock’s IBIT currently ranked as the fifth largest ETF by inflows this year. Despite this wave of rapidly growing popularity, it remains to be seen whether the projected bullish valuations set by firms such as Standard Chartered Bank and Fidelity will materialize. Nevertheless, it is clear that the era of bitcoin ETFs has officially begun.
The key question now is how Wall Street will approach this new means of obtaining bitcoin exposure, and whether everyday investors will clamor for a piece of the action. According to CEO and founder of ONEFUND, Mike Willis, bitcoin could potentially earn a reputation as one of Wall Street’s renowned brands in the next decade. However, Willis maintains that most wealth managers will caution their clients to limit their cryptocurrency allocations to 1-3%, while also highlighting the ethical and legal implications of substantial losses in a highly volatile market like bitcoin.
Many firms are now unveiling a variety of hybrid funds aimed at protecting the downside volatility of bitcoin. Furthermore, competition among these newly approved ETFs has prompted a race to the bottom in terms of management fees, with a number of marketing strategies being implemented to stand out amongst the crowded field. ONEFUND, for instance, has concentrated on providing investors with the security of cold storage for their bitcoins, while also aiming to charge premium rates, recognizing that multiple funds will seek to undercut one another in terms of fees. Furthermore, the firm hopes to leverage its unique branding and offering to tap into the loyal and close-knit bitcoin community, which has displayed an aversion to traditional Wall Street institutions.