Why Only Certain Investors Will Prefer a Bitcoin (BTC) ETF

A new Needham Company (Needham) survey found that retail investors are unlikely to drive inflows into a Bitcoin (BTC) exchange-traded fund (ETF) unless Bitcoin’s price continues to increase. The asset is already up over 150% this year but may increase further ahead of the Bitcoin halving in 2024.

Those who haven’t invested are also unlikely to enter the Bitcoin market through an ETF. Only 11% of survey respondents without exposure to the asset said they would buy it through an ETF.

Bitcoin ETF Unlikely to Drive New Interest

Instead, most investors said they would prefer buying the asset on exchange, even after the approval of an ETF. John Todaro, an analyst at Needham, articulated this surprising finding.

“Any person that has not purchased Bitcoin already is currently unlikely to buy a Bitcoin ETF. Just 11% of respondents who have not owned Bitcoin in the past described themselves as very likely or somewhat likely to buy a Bitcoin ETF.”

The survey found that ETFs would help advisers whose options to give clients Bitcoin exposure are restricted. Those polled expect only 5-10% of their clients to own Bitcoin ETF shares unless Bitcoin’s price continues to increase.

At the time of publishing, Bitcoin is changing hands at around $41,000. This is roughly 148% higher than at the start of 2023. 

The price of Bitcoin has surged before and after Bitcoin halvings. The next, expected to occur in late April 2024, reduces the rewards for a successfully mined block from 6.25 BTC to 3.125 BTC. If the recent rally in Bitcoin’s price is anything to go by, the event could increase the price of Bitcoin independent of an actual ETF approval.

Read more: What Causes Bitcoins Volatility?

Investors Are Looking for Quality: 21Shares

The appeal of a Bitcoin ETF will depend, in part, on the quality of the offering, according to Ophelia Snyder, the co-founder of crypto ETF provider 21Shares.

“Is the thing you’re bringing to market high quality? Because…the world is sick of is crypto products that are both more expensive and less good than what you normally get. That’s not going to work anymore. So it’s going to be a question of, are you bringing something that’s high quality, [and] can you do it quickly? And are you going to be able to actually help clients?”

ARK Invest and 21Shares applied to launch a Bitcoin ETF in April before BlackRock, the world’s largest asset manager. BlackRock and several other applicants are reportedly finalizing out technical details for their ETF applications with the US Securities and Exchange Commission (SEC).

The regulator has until January 10, 2024, to respond to ARK’s application.

Read more: How To Prepare for a Bitcoin ETF: A Step-by-Step Approach

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