Follow these four issues as bitcoin ETFs are set to get the green light

Nate Geraci, president of investment adviser The ETF Store, highlighted key areas to watch in the final stages of the bitcoin ETF race. Other investment professionals are watching and added their own views.

1. The fee wars: Happier days for cryptocurrency investors

A “fee war” has erupted as ETF applicants tried to undercut one another. BlackRock, widely seen as the frontrunner among applicants, leads with a 0.20% fee for the first year, or the first $5 billion. Others like ARK21 (0.25%), Bitwise (0.24%), Franklin (0.29%), Fidelity (0.39%), Wisdom Tree (0.50%), Valkyrie (0.80%) and Hashdex (0.90%) partially cut or waived fees in an effort to compete. Grayscale lowered its fee from 2% to 1.50%. 

Bloomberg ETF analyst Eric Balchunas speculated whether cryptocurrency exchanges will lower their fees, also in a bid to compete.

2. FOMO factor: Institutions hold the key to mass adoption

Geraci noted how industry experts have been hearing rumors. He cited a tweet by Tim Copeland (@Timccopeland):

“VanEck’s Matthew Sigel just said he’s heard from a well-placed source that BlackRock has $2 billion of capital lined up from existing bitcoin holders that want to rotate into spot bitcoin ETFs in week one.”

Such inflows could position the launch of the spot bitcoin ETF among the most successful ETF launches in history. The result would be mainstream legitimacy and, most probably, another significant price surge, as ETF issuers collect institutional inflows. Small wonder the SEC cautioned of “FOMO” ahead of the likely approval. Gary Gensler is warning investors against “fraudsters” in the space, but greenlighting the ETFs may only accelerate the digital asset hype train. 

3. The regulatory rumble: Are institutions your friend?

Established players like JPMorgan are authorized participants in a possible ETF launch, despite the bank’s public tough talk on crypto. These institutions would like to see further regulation of the digital asset sector, something bitcoin purists like Max Keiser, economic adviser to El Salvador’s government, resist. In a tweet, Keiser (@maxkeiser) said:

“You are not protected against government seizure and the US government plans to seize all BTC ETF #bitcoin in the interest of national security.”

Ongoing legal battles, such as the lawsuit involving the Winklevoss twins’ bitcoin ETF, along with unresolved U.S. digital asset regulatory issues, suggest an increase in regulatory measures rather than a decrease.

4. The Grayscale gambit: The king is … dead?

As the custodian of the world’s largest bitcoin investment fund, Grayscale holds a unique position in the market. Geraci points out that a potential conversion of GBTC into a spot ETF would be a game-changer. Such a move would instantly inject billions of dollars of liquidity into the ETF market, potentially boosting bitcoin’s price and making the Grayscale ETF the biggest player right out of the block. On the other hand, Grayscale is pitching the highest potential management fee at the time of writing.