Bitcoin ETFs solve the psychology of unit bias, says Van Eyck consultant
The price of a whole bitcoin (BTC) may deter investors who are hesitant to buy only a fraction of the cryptocurrency, due to the psychology of unit bias, which favors owning complete units, said Gabor Gurbaks, a consultant at VanEick. Bitcoin exchange-traded funds (ETF) are the solution to this challenge.
In a series of posts on X (formerly Twitter), Gurbacs noted that many people still don't know they own a portion of Bitcoin, and pointed out that there are many individuals who prefer to hold only the entire asset.
“I'm surprised that a good number of people don't know that one can own a fraction of a bitcoin, and even more often people don't want to own a fraction of a coin.”
Bitcoin is trading at ~$44,000 today.
ETFs usually start at a double-digit NAV, usually $25. So, hypothesize that the Bitcoin ETF starts at $44 per share, minus 3 zeros.
That eliminates a lot of unit bias. Suddenly Bitcoin's exposure seems more reasonable.
easy…
— Gabor Gurbacs (@gaborgurbacs) January 6, 2024
Additionally, he reiterates that it appears more attractive to investors to own whole assets than fractional ones.
Holding a full share feels better than holding 0.001 bitcoins. It seems like a small thing, but it's a big thing,” he said.
Although Gurbax realizes that this argument is not new, bias represents one of the most useful tools for understanding markets.
“Simple but very important is the psychology of unit bias. I think about this a lot,” he added.
RELATED: BlackRock to Cut 3% of Workforce Ahead of Bitcoin ETF Deadline: Report
Meanwhile, the crypto industry is full of high hopes that the United States Securities and Exchange Commission (SEC) will greenlight the Bitcoin ETF somewhere in the coming week.
However, the broader financial services industry is more skeptical.
According to a recent survey by Bitwise with responses from 437 financial advisors, 39% of US financial advisors expect the approval of a Bitcoin ETF by 2024.
Cointelegraph recently reported on Wall Street that the first round of Bitcoin ETF valuations are underway, with final revisions from asset managers expected on the morning of January 8.
The amendments must be filed through S-1 filings before the start of business, and applicants are expected to disclose outstanding fees and charges.
BlackRock has not yet disclosed the fees associated with the ETF.
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