Once Bitcoin’s spot ETF is approved, the CBOE anticipates a flood of institutional investors.
A spot Bitcoin exchange-traded fund (ETF) might have a positive effect on the cryptocurrency market, according to John Palmer, president of CBOE Digital. Palmer said that this green light would spark a fresh wave of interest in Bitcoin futures from both institutional and individual investors.
John Palmer recently discussed the potential far-reaching effects of authorizing a spot Bitcoin ETF in an interview with Bloomberg TV. He stressed that the green light will open the door for pension funds and other institutional investors to purchase Bitcoin via Registered Investment Advisor (RIA) funds.
Palmer explained, “Pension and RIA-based funds will be able to invest in assets in a spot Bitcoin ETF if approval is granted.”
The introduction of a spot ETF would solve the problem of many funds not having direct access to Bitcoin, which might attract large amounts of institutional money to the market.
The ARK Invest 21 Shares Bitcoin ETF application is due to the U.S. Securities and Exchange Commission (SEC) for a crucial judgment on January 10, 2024. Bitcoin exchange-traded funds (ETFs) and their future availability to investors are heavily dependent on this decision.
There may be a surge in activity around Bitcoin derivatives if the ARK Invest 21 Shares Bitcoin ETF proposal is greenlit. Palmer thinks that institutional investors will depend on derivatives more and more to protect themselves from bitcoin market risk when a spot ETF is approved.
While Palmer acknowledges that institutional investors would be quick to use Bitcoin derivatives as a hedge, he also predicts that individual investors will want exposure to these instruments. Predicting the precise distribution of investor interest, he said, may be difficult. Still, institutional investors are likely to lead individual investors in investigating these hedging strategies.
The Chicago Board Options Exchange’s cryptocurrency subsidiary, CBOE Digital, has been heavily engaged in growing the cryptocurrency market. Their January 11, 2024, launch of margined trading for Bitcoin and Ethereum futures is fast approaching.
As a result of this change, investors will have more leeway in the market to trade these contracts without fully collateralizing them.
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