Insignia Consultants | Reuters Analysis: In spot bitcoin ETF race, some pioneers stick to the sidelines

Reuters Analysis: In spot bitcoin ETF race, some pioneers stick to the sidelines

Nov 28 (Reuters) - Despite growing excitement that spot bitcoin exchange-traded funds (ETFs) will soon win regulatory approval, some cryptocurrency ETF pioneers plan to sit out what is expected to be a fierce industry battle for market share.

Demand for a bitcoin ETF, which would allow retail and institutional investors to easily bet on the price of the world's biggest cryptocurrency, is expected to draw in as much as $3 billion from investors in the first few days of trading and pull in billions more thereafter.

Yet some established names in the blockchain and cryptocurrency space - including ProShares, Amplify Investments and Roundhill - are so far steering clear of launching a bitcoin ETF. They worry that the field is too crowded, the regulatory and marketing costs too high, and that demand will not be strong enough to compensate for that.

Though they remain a small minority in a race where both big and small players are diving in, their skepticism suggests the hype over a spot bitcoin ETF may be misplaced and that the products could prove unprofitable for some issuers rushing into the space.

"This could be the most successful ETF launch in history, but it's still going to be intensely competitive, requiring a lot of investment up front," said Dave Mazza, chief strategy officer at Roundhill Investments, which hopes to launch cryptocurrency ETFs but has no plans for a spot bitcoin ETF.

"You have to weigh the odds that you'll end up as one of the winners or an also-ran."

The SEC has long rejected spot bitcoin ETF applications on the grounds they do meet its investor protection requirements.

https://www.reuters.com/technology/spot-bitcoin-etf-race-some-pioneers-stick-sidelines-2023-11-28/

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