Spot Bitcoin ETFs are considered a turning point for cryptocurrency markets, with significant long-term price contributions expected. Nearly all experts agree that they will trigger a supply shortage and push prices higher. But what is causing the short-term weakness? What should investors expect in the coming period? How should we interpret the current situation?
Assessment Underway
As the CIO of Bitwise stated, “people have overhyped spot Bitcoin ETFs for the short term,” but he also mentions “they are not giving enough credit to the long-term effects.” Despite the optimism not being unfounded, with hundreds of millions in net inflows, Bitcoin’s price did not experience massive growth with the ETF approval. However, this does not mean it won’t happen in the long term.
The current weakness, as we may call it, is partly due to companies like LPL Financial Holdings just beginning their assessments. According to a Bloomberg report dated February 3, companies like LPL Financial Holdings, one of the largest independent broker-dealers in the United States, have started examining spot Bitcoin ETFs.
19,000 independent financial advisors managing $1.4 trillion in assets are at the decision-making stage about whether to recommend this field to their clients. Rob Pettman, Executive Vice President of LPL Financial Wealth Management Solutions, said, “We just want to see how they work in the markets.”
The Future of Cryptocurrencies
Even if spot Bitcoin ETF approvals are granted, it won’t be easy for advisors to start offering them to clients globally and attract investors to ETFs. Spot Bitcoin ETFs, which only a few customers of ETF issuers are aware of, have significant investor potential.
LPL Financial plans to complete its assessment of Bitcoin ETFs within three months. One of the key points being evaluated is the possibility of ETFs being shut down if they perform poorly and fail to accumulate significant assets. Although investment advice has not yet been given, and no decision has been made on whether to offer this product to clients, this is the final stage, and if the assessment yields positive results, investors with trillions of dollars in assets could enter this space.
Since the first three months’ performance will be in the focus of global investment advisors, it won’t be surprising to see giants like BlackRock and Fidelity striving to ensure a steady flow of investors. This indicates that cryptocurrencies may not suffer significant losses in the short term as well.
Pettman stated;
“This could be a very negative experience for both the investor and the financial advisor. Moreover, it is incredibly costly for a firm like ours to facilitate this operationally. It is important to be sure that ETFs are resilient over time and that they have a good investment thesis. Ultimately, this is the position we normally take when evaluating them.”
Bloomberg’s ETF analyst James Seyffart also said;
“Many large institutions, the platforms where brokers or advisors work, cannot buy whatever they want. There’s something like an approved list and an unapproved list. I don’t think we’ll be over 100 billion dollars in the first or second year. To put it in perspective, gold ETFs have about 100 billion dollars in total in the US.”
