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Bitcoin ETF Serves New Audience for Crypto Assets

Real Money's Kevin Curran looks at the implications of the bitcoin ETF

The ProShares Bitcoin Strategy ETF  (BITO) - Get PROSHARES BITCOIN STRATEGY ETF Report rolled out earlier this month raising the possibility of a whole new audience for digital assets.

Real Money's Kevin Curran has an outlook on the new fund’s long-term prospects, even with traders still buzzing over BITO’s big first day.

“As the new vehicle attracts attention, there is reason to look past the initial excitement and be mindful of the audience it can court, its comparison to investment in Bitcoin itself, and the signal the success or failure of the ETF's debut on the NYSE will send to investors,” Curran wrote recently on Real Money. “All three factors could be pivotal not only for investors eager to buy the ETF itself, but for Bitcoin and crypto investors more broadly.”

While initial excitement may be emanating from long-term crypto evangelists, the actual target of the new ProShares product is more likely to be found among an entirely new audience.

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"Predominantly the ETF will be invested in by individuals and institutions that do not have exposure to crypto today," said Sui Chung, CEO of Kraken-subsidiary CF Benchmarks, in comments to Real Money. "There’s also a second constituency of investors that might have a Kraken, Robinhood  (HOOD) - Get Robinhood Report, or Coinbase  (COIN) account that invest and trade in cryptocurrencies."

According to Chung, the second group now has more scope to allocate assets to cryptocurrencies, via retirement accounts, 401(k)s, or other vehicles. Additionally, Chung said lessened regulatory risk of investing in an ETF listed on the NYSE is likely to encourage adoption among previously apprehensive investors.

Even for sophisticated institutional investors, the ease of access, liquidity, and lessened regulatory risk is likely to encourage some adoption. “This is particularly important for institutional investors that may have had trouble or were otherwise averse to adding cryptocurrency exposure in the past,” Curran noted.

According to Fidelity Digital Assets, two-thirds of U.S. institutional investors lack any exposure to digital assets. “While volatility is a primary concern cited in the report and not likely to be assuaged by the latest product, the regulatory risk cited as secondary by Fidelity is one that might be overcome by use of NYSE-listed and SEC-approved products like these ETFs,” Curran said.

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