Palmer asserts that the introduction of regulated bitcoin exchange-traded funds will attract new institutional investors, such as pension funds and registered investment adviser funds.
While these funds have long held an interest in digital assets, their investment in Bitcoin has been hindered by the requirement of directly owning cryptocurrencies. With the advent of ETFs, investors no longer need to possess the asset themselves.
Additionally, Palmer predicts a influx of funds into cryptocurrency derivatives, as institutional investors evaluate the profitability of spot ETFs and become interested in derivative products for risk mitigation.
Notably, applications for spot Bitcoin ETFs have been submitted by BlackRock, VanEck, Valkyrie, and Fidelity. Analysts expect the US Securities and Exchange Commission (SEC) to grant approval for spot Bitcoin ETFs by January 10th.
However, Eric Balchunas warns that there remains a slim chance of the regulator rejecting the launch of such funds.