- CBOE President John Palmer foresees institutional embrace through post-Bitcoin ETF approval.
- The market veteran is optimistic retail investors will also join the BTC ETF bandwagon.
John Palmer, President of the Chicago Board Options Exchange (CBOE), America’s largest options exchange, is optimistic that the potential approval of spot Bitcoin Exchange-Traded Funds (ETFs) could mark a turning point in institutional interest and participation in the Bitcoin market.
Institutional Interest and Derivatives Following Bitcoin ETF Approval
In a recent interview on Bloomberg TV, Palmer discussed the potential approval of these ETFs and its implications for the broader crypto market. Palmer emphasized that the approval of spot Bitcoin ETFs would attract a new wave of institutional investors.
He believes that pension funds and Registered Investment Advisor (RIA)-based funds would gain access to Bitcoin through these ETFs, providing a native spot for Bitcoin investment. Notably, RIAs are companies registered with regulatory agencies to provide investment advice.
Palmer also mentioned a possible shift in institutional attitudes to derivatives such as options and futures contracts. With the legalization of spot BTC ETFs, Palmer believes that more institutional players that are used to hedging risks may turn to derivatives for risk management.
While institutions are expected to lead the way in adopting spot Bitcoin ETFs, Palmer acknowledged that retail investors would also seek exposure to this emerging investment vehicle. He emphasized that ETFs offer both institutional and retail investors a “broader ecosystem,” creating a dynamic market for Bitcoin derivatives.
Notably, CBOE Digital, the crypto division of the exchange, is set to launch margined Bitcoin and Ether derivatives trading on January 11, providing investors with an avenue to trade these contracts without supplying the full collateral.
The SEC’s Role and Pending Decisions
The US Securities and Exchange Commission (SEC) plays a pivotal role in determining the fate of spot BTC ETFs. As the SEC faces a January 10 deadline to decide on the ARK Invest 21 Shares Bitcoin ETF application, the crypto community awaits the regulatory verdict.
Several financial giants are making strategic moves in the crypto space, indicating a growing interest in Bitcoin ETFs. BlackRock, with its updated mechanisms, VanEck, Fidelity Investments, and Franklin Templeton are among the key players positioning themselves for potential spot Bitcoin ETF approvals.
These firms bring substantial Assets Under Management (AUM) and market influence, contributing to the credibility and acceptance of Bitcoin as an institutional-grade asset.
In addition to industry titans, smaller players like NYDIG, Galaxy Digital, ARK Invest, Bitwise, Valkyrie, Hashdex, and Pando are actively involved in the BTC ETF race. These companies, with their crypto expertise, pose strong competition in the evolving market. Noteworthy is the strategic positioning of Hashdex and Pando in South America and Switzerland, respectively, suggesting a global impact on the adoption of Bitcoin ETFs.
Excitingly, some mutual funds have begun to float plans to increase their exposure to spot Bitcoin ETFs once they are approved. Earlier this week, mutual fund manager Advisors Preferred Trust amended its prospectus to state that the fund “may invest up to 15% of its total assets to indirectly gain exposure to Bitcoin, through shares of Grayscale Bitcoin Trust, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts.”
Breaking: A pattern is emerging. Other funds registered as securities already trading on the NASDAQ are ammending their prospectuses that they can now expose 15-50% of their AUM to Bitcoin, through the Spot Bitcoin ETFs. @saylor called it.
Here we see Advisors Preferred Trust… pic.twitter.com/Za7DNRXs36
— MartyParty (@martypartymusic) January 2, 2024
Despite the growing optimism, Bitcoin’s price has dropped by 7.4% to $42,233.82 with a corresponding slump in market cap which is now pegged at $833,634,914,757.
