BlackRock filled for a Bitcoin ETF, and there has been a split of opinions among crypto market members. BlackRock manages about US$10 trillion worth of assets. The entity has filed to launch the first publicly traded spot Bitcoin exchange-traded fund (ETF) in the U.S. The decision comes on the back of regulators in the country filing lawsuits against crypto platforms for alleged violations of securities laws.
Market analysts weigh in on the BlackRock ETF filing
Bloomberg market analysts have put forth theories regarding BlackRock’s motivation behind filing for a Bitcoin exchange-traded fund (ETF). The big question in the market has been, “What’s the difference between BlackRock’s ETF and the Grayscale Bitcoin Trust?” Eric Balchunasn suggests that the SEC might favor institutional players like BlackRock to lead the digital asset space.
Eric states that the Greyscale fund is like a private fund with limited shares that trade over the counter. By this, it’s very easy for these shares to have a price disparity from the actual Bitcoin price. This is because traders cannot arbitrage the two. Crypto arbitrage is a trading strategy that aims to capitalize on price differences in cryptocurrencies
On the other hand, ETFs allow for the continuous creation of redemptions. This is because if the price of the ETF starts to deviate from that of BTC, soon it will arbitrage. This is because BLK can always sell short the underlying and buy the ETF and vice versa. BlackRock now has an opportunity to help crypto traders track the price of BTC.
James Seyffart states that the good thing about the BlackRock ETF, or ETFs in general, is that the entities can always source supply to meet demands. As with traditional stock markets, The demand always changes the stock prices. Market traders wonder what that would do with BTC prices when the Fear and Greed Index falls short.
The difference in the ETF path taken by BLK and Grayscale is that Grayscale began the journey as a private fund while BlackRock went guns out to register an ETF. According to reports, the SEC blocked GBTC (Grayscale Bitcoin Trust).
Why did BlackRock file for an ETF?
These market analysts point out that nothing will happen to GBTC now that BlackRock (BLK) has filed for an ETF. However, it’s good to note that BLK is the gorilla in the ETF trading front. BLK makes up 33% of the ETF market and Vanguard at 30%. James Seyffart asserts that when these two behemoths make moves, they often don’t miss.
The reason for this is because they are well connected and can play well and around regulations. There is another take and a trade advantage point. James points out that the odds of Grayscale winning against the SEC stand at 70%. Thus, the reason BLK could be filling for an ETF is because they think Grayscale will win.
Finally, according to Balchunas, the SEC’s recent regulatory moves against exchanges reflect a willingness to establish winners and losers in the market. With this move, BlackRock positioned itself as a strong company that adheres to regulations. Another explanation advanced by Balchunas is that BlackRock’s decision anticipates a possible resolution of Grayscale’s legal conflict with the SEC.
In the event that the SEC loses the case, it may open the way for Bitcoin ETFs, and BlackRock may be planning to profit from this scenario. Balchunas points out BlackRock’s track record of ETF approvals. With a record of 575-1 with the SEC, their involvement in the Bitcoin ETF filing is significant.
