The Chicago Board Options Exchange (CBOE) Digital president, John Palmer, has expressed optimism about the potential approval of a spot Bitcoin exchange-traded fund (ETF) and its impact on the cryptocurrency market. Palmer said this approval could usher in a new era of institutional and retail interest in Bitcoin derivatives.
In a recent interview on Bloomberg TV, John Palmer highlighted that approving a spot Bitcoin ETF would have far-reaching consequences for the cryptocurrency market. He emphasized that the approval would create an avenue for institutional investors, including pension funds and Registered Investment Advisor (RIA)-based funds, to gain exposure to Bitcoin.
“Approval will pave the way for pension and RIA-based funds to invest in assets in a spot Bitcoin ETF.”
Many funds face limitations in directly accessing Bitcoin, but introducing a spot ETF would address this challenge, potentially drawing significant institutional capital into the market.
The U.S. Securities and Exchange Commission (SEC) is set to make a critical decision regarding the ARK Invest 21 Shares Bitcoin ETF application by January 10, 2024. This decision will carry substantial weight in determining the future of Bitcoin ETFs and their accessibility to investors.
If the ARK Invest 21 Shares Bitcoin ETF application is approved, it could serve as a catalyst for further interest and investment in Bitcoin derivatives. Palmer expects that the approval of a spot ETF will increasingly encourage institutional players to rely on derivatives to hedge risks in the cryptocurrency market.
While institutional investors will likely be the first to take advantage of Bitcoin derivatives for hedging purposes, Palmer believes retail investors will also seek exposure to these tools. He mentioned that predicting the exact breakdown of investor interest may be challenging. Still, retail investors are expected to follow the lead of institutions in exploring these hedging options.
CBOE Digital’s role in the cryptocurrency market
CBOE Digital, the cryptocurrency division of the Chicago Board Options Exchange, has been actively involved in expanding cryptocurrency offerings. They are gearing up to launch margined Bitcoin and Ether derivatives trading on January 11, 2024.
This development will allow investors to trade these contracts without the need to supply full collateral, providing additional flexibility in the market.
In anticipation of the potential approval of spot Bitcoin ETFs, some mutual funds are already making strategic adjustments to their investment portfolios. Advisors Preferred Trust, for example, recently updated its prospectus to allow for investments of up to 15% of its total assets in Bitcoin-related assets.
This includes gaining exposure to Bitcoin through shares of the Grayscale Bitcoin Trust, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts.
As the SEC’s decision on the ARK Invest 21 Shares Bitcoin ETF application draws near, the cryptocurrency market remains on the edge of its seat. The outcome of this decision is poised to significantly impact the accessibility of Bitcoin to institutional and retail investors alike, potentially reshaping the landscape of cryptocurrency investment.