ETFGI, Charles Schwab Fund Providers Say There’s Sufficient Market Liquidity for a Bitcoin ETF


In the near future, the first Bitcoin (BTC) exchange-traded fund (ETF) could be approved by the U.S. Securities and Exchange Commission. However, during the last several years, the proposals made by companies in the crypto space have failed to convince the U.S. regulators. This time, passive fund providers believe that there is enough market liquidity for a Bitcoin ETF to be launched as soon as this year.

ETFs are becoming an important investment tool for companies and investors around the world. According to the research firm ETFGI predicts that in 2020 ETFs and ETPs in Europe will reach $1.1 trillion. However, this is not the most positive forecast. Morgan Stanley predicts that global ETF assets will reach $9 trillion by 2022.

The most important Bitcoin ETF proposal was made by SolidX and Vaneck. However, to receive approval several factors must be considered, including liquidity, investors’ protection and market manipulation.

According to Eric Ervin, the CEO of Blockforce Capital commented about a Bitcoin ETF:

“First, Bitcoin has a market capitalization of $72 billion. While this is small in comparison to many blue-chip stocks, there are a number of ETFs currently on the market that are focused on esoteric assets. For example, iShares’ IWC ETF focuses on micro-cap stocks, and has almost $900 million in assets.”

According to Ervin, exchange arbitrage is a growing business in the market. Indeed, several investors enter the market to shield returns from arbitrage, since they are considered ‘risk-free.’ Blockforce capital arbitraged prices at the beginning of summer 2018. However, as the year passed, the number of exchanges increasing liquidity increased and opportunities for arbitrage decreased.

It is important to remember that Sweden has a crypto financial product, a bitcoin exchange-traded note (ETN). Furthermore, XBT Provider AB announced the authorization of Bitcoin tracker One, the first Bitcoin-based security that was available on a regulated exchange.

In the future, if a Bitcoin ETF is approved, other crypto financial products could be released to the market as well. The U.S. SEC is going to give a final decision regarding the Vaneck-SolidX proposal fora Bitcoin ETF as soon as February 2019. The limit date is February 27.

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