VanEck’s “Limited Bitcoin ETF” Fails to Attract Institutional Investors At Launch; Too Early To Judge

  • Too early to judge the success or a bad launch of a product with “not much demand”
  • Bitcoin ETF approval: Progress is being made

After the successful petition to the US Securities and Exchange Commission (SEC) for over a year to approach a Bitcoin exchange-traded fund (ETF), the investment firm VanEck and SolidX found a workaround for large investors by launching its “Limited Bitcoin ETF” last week.

“There continues to be steady demand from institutional investors seeking access to a cleared product that offers the price return of Bitcoin,” said Ed Lopez, head of ETF product, VanEck at that time.

He also said the product will issues associated with direct Bitcoin investments.

The idea was to bring an entirely new class of investors to the table while promoting the maturation of the bitcoin market in the midst of what Daniel H. Gallancy, chief executive officer of New York-based SolidX said, is “sea change for institutions, for the Bitcoin ecosystem and for how market participants define an ETF.”

A Bad Launch of Product that has Moderate Demand

However, the firm hasn’t been able to attract institutional investors yet.

The VanEck SolidX Bitcoin Trust 144A Shares, the first open-end and DTC-eligible bitcoin security that can be held in a brokerage account, is only managing total net assets of $41.4k.

“Three days after launch, the VanEck bitcoin trust for institutional investors has reportedly managed to issue a whopping 1 (one) basket. It has 4 bitcoins or $41,400 in assets under management. Massive,” economist and trader Alex Kruger took a jab at the company's institutional investment, or the lack of it, in the product.

Bitcoin bull and Fundstrat’s Tom Lee believes, “it is too early to judge the success of the product.”

But Kruger begs to differ. According to him VanEck’s not a Bitcoin ETF but just another Grascale’s Bitcoin trust-like product is “just a bad launch of a product for which there's not much demand. It is for QIBs alone i.e. >100M in aum.”

Bitcoin ETF Approval: Hard Questions Still Need to be Answered

Bitcoin ETFs are not a reality yet and according to SEC Chairman Jay Clayton, it might be soon.

His response to whether the market is anywhere closer to satisfying the concern of the SEC is “yes” as he said “now progress is being made.”

These hard questions — that were needed to answer to make SEC comfortable that this was the appropriate type of product — revolve around custody, the key question is how to have a hold of these crypto assets and even harder one is that they trade on largely unregulated exchanges so how can it be ensured that those prices are not subject to significant manipulation.

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