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.
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