It remains to be seen if the SEC will give the nod to a spot bitcoin ETF. However, there’s no denying that if the commission approves those products, it will be one of the seminal events in the history of the ETF industry.
ETF experts are speculating that such a fund could be the largest launch in terms of first-day assets gathered in industry history. Regardless of what issuer is given the green light by the SEC, that move could have positive implications for a variety of established crypto ETFs, including the Invesco Alerian Galaxy Crypto Economy ETF (SATO).
As Bloomberg ETF analyst Eric Balchunas pointed out, a spot fund could unlock new frontiers for crypto as an investable asset class. And yes, there’s a price tag on that claim. He claimed that as much as $30 trillion in investable assets could be on the table. To be clear, that doesn’t mean $30 trillion will flow to spot bitcoin ETFs. That won’t happen, but such a product would broaden the audience of market participants at least considering crypto.
History Matters
Specific to SATO, that ETF could benefit from a spot bitcoin ETF’s debut. That could trigger price increases for the largest digital currency, to which SATO holdings are highly correlated.
It bears repeating that the SEC’s plans on this front aren’t yet known. The commission also has a well-documented history of turning back spot bitcoin applications for a variety of reasons. However, there’s no denying that many advisors and investors prefer to invest in alternative asset classes via ETFs.
“ETF is the format in which the boomers and the financial advisors prefer their investments delivered in,” Balchunas told Marco Castrovilli of CoinTelegraph.
Gold ETFs provide an important history lesson. Prior to the debut of the SPDR Gold Shares (GLD) in November 2004, the primary avenues for exposure to the yellow metal were via futures contracts or storage of physical gold. Today, the three largest gold ETFs, including GLD, combine for over $90 billion in assets under management. Another five physical gold ETFs have least $627 million in assets under management. One member of that quintet holds more than $2.7 billion.
Advisors and retail investors love ETFs, particularly when it comes to accessing unique asset classes. That adulation will likely be on display if a spot bitcoin ETF is approved. SATO could reap some rewards from that event.
VettaFi LLC (“VettaFi”) is the index provider for SATO, for which it receives an index licensing fee. However, SATO is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing or trading of SATO.
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