Spot Bitcoin exchange-traded funds (ETFs) will attract new institutional investors, according to the Chicago Board Options Exchange (CBOE ), the largest options exchange in the United States.
John Palmer, president of CBOE Digital, stated in a Bloomberg TV interview on January 2 that approval would pave the way for a subsequent surge of institutional and retail interest in Bitcoin derivatives.
Many funds are unable to obtain direct exposure to Bitcoin at this time. “Approval will pave the way for pension and RIA-based funds to invest in assets through a spot Bitcoin ETF,” he added.
An RIA corporation has obtained registration from federal or state regulatory agencies to offer investment advice.
Palmer made these remarks a week before the SEC must determine whether to approve the ARK Invest 21 Shares Bitcoin ETF application on January 10.
Palmer anticipates a substantial expansion of Bitcoin derivatives products after the prospective authorization of a spot ETF. He further stated that institutional actors will “inexorably rely more and more on those derivatives” to mitigate risks.
Palmer declared: “At this time, it will be difficult to predict the [investor] breakdown,” adding that institutions are the first to obtain access to hedging instruments. “However, the retail sector will also seek that out.”
CBOE Digital is the exchange’s cryptocurrency division, which trades cryptocurrency futures and options. On January 11, the platform intends to introduce margined trading for Bitcoin and Ether derivatives, enabling participants to engage in contract transactions without the obligation to provide complete collateral.
Conversely, several mutual funds have begun circulating strategies to increase their exposure to spot Bitcoin ETFs once authorized.
Advisors Preferred Trust modified its prospectus on January 2 to permit the fund to “invest up to 15% of its total assets in Grayscale Bitcoin Trust shares, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts to gain exposure to Bitcoin indirectly.”
