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Home»ADOPTION NEWS»Spot Bitcoin ETFs may be trading at a premium to fair value, says GTS’s Reggie Brown.
ADOPTION NEWS

Spot Bitcoin ETFs may be trading at a premium to fair value, says GTS’s Reggie Brown.

By Crypto FlexsJanuary 9, 20243 Mins Read
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Spot Bitcoin ETFs may be trading at a premium to fair value, says GTS’s Reggie Brown.
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Reggie Browne, GTS joint head of global ETF trading and sales, said on Bloomberg Television that the Bitcoin spot ETF could trade at a premium once trading begins due to the way U.S. institutions are currently allowed to handle cryptocurrencies.

“I think there will be a premium above NAV because U.S. broker-dealers cannot trade Bitcoin for cash inside the broker-dealer. Some can, but most cannot,” he said on Monday. “So you have a trading hedge against futures, you trade it at a premium and then you unwind it, and I think there’s a lot of complexity there.”

This complexity, coupled with the fact that Bitcoin futures are trading at a premium to the spot price, will result in “huge numbers” for investors, he said, with 8% as the offering.

At the same time, Browne said there was enough liquidity to keep spreads “very competitive and tight.”

“The market making community is ready to provide a lot of liquidity and elasticity to this structure, so spread width is not an issue,” he said.

Creation and Redemption

Browne added that while in-kind creation and redemption had been a sticking point in negotiations with the Securities and Exchange Commission, he expects it to become a reality at some point. Ultimately, all companies currently awaiting approval of their ETF applications settled on a cash-only model.

“It was really about getting the ball moving. “The payoff would come after climbing a couple of mountains.”

The cryptocurrency community has been anxious over the past week as the deadline approaches for the SEC to approve the first batch of 13 applications currently on the table from asset managers including Ark Invest, BlackRock, Fidelity, Grayscale, WisdomTree, and Franklin Templeton. . , and Valkyrie.

Bloomberg Intelligence analysts say this is a sign of how big the market can become. Eric Balchunas noted on Monday that Grayscale Investments’ flagship GBTC fund, which seeks to convert into a cash ETF, traded at nearly $500 million on Monday.

That’s “more than 99% of the 3,000 ETFs out there today, and it’s a reminder that if they were to launch with all the other ETFs, they would be in a (massive) gunfight.” Balcheon wrote.


Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.

© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.

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