Last month, the world’s largest asset management company, BlackRock, applied for a spot Bitcoin ETF with the U.S. Securities and Exchange Commission (SEC), which led to an explosion in interest in Bitcoin investment products. The New York Digital Investment Group (NYDIG), which offers cryptocurrency custody services, has clarified in its latest research report how the U.S. greenlighting a spot Bitcoin ETF could be a game changer for Bitcoin investors.
Although the spot Bitcoin ETF is an accessible investment product in various regions of the world, it is not yet accessible in the U.S. market. NYDIG, estimating that the total value of the assets invested in Bitcoin investment products worldwide has reached 28.8 billion dollars, asserts that 27.6 billion dollars of this value comes from spot investment products.
NYDIG also shared an interesting analogy between Bitcoin and gold, two assets often compared to each other. It was mentioned that over 210 billion dollars in total have been invested in gold ETFs worldwide, and nearly half of this value (107.3 billion dollars) comes from North America.
While Bitcoin is not currently held by the central banks of countries (except for El Salvador) or used in products like gold, a larger portion of its supply (4.9 percent) is held in various funds compared to gold (1.6 percent). When looked at private asset funds, this ratio is more favorable for Bitcoin than gold, which includes ETFs, bullions, and coins. NYDIG expects a 30 billion dollar capital influx into Bitcoin with the advent of the spot Bitcoin ETF, and added the following note:
The figures are quite striking in dollars; while over 210 billion dollars have been invested in gold funds, only 28.8 billion dollars have been invested in Bitcoin funds. Bitcoin is approximately 3.6 times more volatile than gold. This shows that, on a volatility equivalent basis, investors need 3.6 times less Bitcoin than gold to be exposed to the same risk. So, if a green light is given to a spot Bitcoin ETF, we expect an additional demand of approximately 30 billion dollars.
While NYDIG emphasizes that the advent of the spot Bitcoin ETF will cause a surge in Bitcoin and the rest of the crypto market, not all market players share the same view. Banking giant JPMorgan, in a report published earlier this month, stated that a spot Bitcoin ETF might not have as significant an impact on the market as expected. The banking giant underscored that spot Bitcoin ETFs have not been very successful in overseas markets and thus, there’s no reason they would be successful in the U.S.