Biggest Bitcoin fund in the world could become ETF by July as GBTC nears $40B AUM

One of Grayscale’s executives said that Grayscale could launch its Bitcoin exchange-traded fund ETF (ETF), as soon as July 2022.

At a MarketWatch virtual event on Oct. 27, Grayscale’s global head of ETFs David LaValle presented a nine-month timeline to allow US regulators approval.

Grayscale: It’s time to apply for an ETF

Grayscale, which manages the Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin investment product, has reiterated its commitment to transforming it into an ETF.

LaValle stated that the perfect time to submit the application was this week.

He said, “We felt it was the right time to submit our file.”

“Now that Bitcoin futures products are a bit off the SEC’s plate, they would be open for spot-based products to be filed.”

ETF applications must undergo a lengthy, 240-day analysis with the U.S Securities and Exchange Commission. This allows for the possibility of a go-ahead in July.

October saw four ETFs receive the green light. They were all based on Bitcoin spot rather than futures, which Grayscale and other ETF developers are eager to change.

As of Thursday, GBTC had $38.8 Billion in assets under management (AUM), with $53.1 billion across all Grayscale funds.

GBTC holdings vs. BTC/USD chart. Source: Bybt

Hayes: ETF markets need “fresh capital”

Cointelegraph reported that there are high hopes that spot ETFs, which have been criticized for their futures-based operations, will be permitted to operate starting November.

Related: GBTC had better returns last week than Bitcoin ETFs

JUST SAW ANALYSIS from a fund manager trader on the 1st futures rolling date for #bitcoin ETFs. (They roll to new front month contract). It’s not pretty, as ETF investors are subject to large tracking errors. Two flash crashes in #BTC prices have occurred since the inception of ETFs. Ugh
— Caitlin Long (@CaitlinLong_) October 29, 2021

Arthur Hayes, a former chief of BitMEX’s derivatives trading giant, gave a more critical assessment of the whole ecosystem this week.

The Grayscale Bitcoin Trust (GBTC) is a pseudo-ETF that has over $40 billion in AUM. Although it isn’t technically an ETF, it hoovered assets. He wrote that it is not necessary to move AUM from one tracker product or another but for fresh capital to enter the system.

“When GBTC is included in the mix of US-listed tracking products, will there be net new demand for retail traders and institutions that aren’t already investing in the space?” As those who are interested in the complex already have a lot of AUM, I worry that the narrative about institutional and retail investors pouring it into the complex may be misplaced.

The market has had years to price an ETF launch. This having seen numerous rejections by SEC. Each time the Bitcoin price moved less and less with each passing year.

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