Corporations Holding Off on Buying Bitcoin ETFs: Bitwise
Demand for Bitcoin exchange-traded funds (ETFs) is slowly gaining traction, but according to crypto asset manager Bitwise, major players in the market haven’t started purchasing them yet. In a recent post, Bitwise CIO Matt Hougan highlighted investor groups that have already entered the market and those that are expected to invest in Bitcoin ETFs in the near future.
Among the potential sources of demand that have yet to join are “wirehouse advisors,” “corporations,” and “institutional consultants.” Wirehouses, such as Morgan Stanley and Merrill Lynch, offer a range of financial services and have been cautious about entering the ETF market. However, recent success and efficient trading of Bitcoin ETFs offered by BlackRock, Fidelity, and others may prompt them to change their stance.
Hougan noted that initial demand for ETFs has largely come from retail buyers, but new participants have emerged, including registered investment advisors, family offices, hedge funds, venture capital funds, and asset managers. However, the major wirehouses are still to embrace ETFs, and a significant wave of adoption is expected once they do.
In terms of corporate buyers, MicroStrategy remains the largest holder of BTC, with 193,000 coins as of March 2024. The company recently announced a $600 million convertible note offering to raise more funds for Bitcoin purchases. Additionally, Bitwise predicts that endowments, pension funds, sovereigns, and supernationals could also become major buyers of ETFs. Currently, El Salvador stands as the only country to confirm publicly its addition of BTC to its Treasury.
The pressure on wirehouse platforms to onboard ETFs for their clients is mounting, as per Bloomberg ETF analyst Eric Balchunas. While wirehouses typically prefer to see a track record and returns before adopting new products, the growing grassroots demand for Bitcoin ETFs might force them to expedite their decision-making process.
Overall, the market for Bitcoin ETFs is still in its early stages, with significant potential demand from various types of investors yet to be fully realized.