Why the Bitcoin ETF May Not Be as Bullish as You Think

A new Needham & Company (Needham) survey finds that retail investors are unlikely to flock to a Bitcoin (BTC) exchange-traded fund (ETF) unless the price of Bitcoin continues to rise. The asset is up more than 150% this year but could rise even more in 2024 when Bitcoin halves.

Non-investors are unlikely to enter the Bitcoin market through ETFs. Without exposure to the asset, only 11% of survey respondents said they would buy through an ETF.

Bitcoin ETF is unlikely to drive new demand

Instead, most investors said they would prefer to buy the asset in exchange once the ETF is approved. John Todaro, a Needham analyst, reported this surprising finding.

“Anyone who hasn't bought Bitcoin is unlikely to buy a Bitcoin ETF right now. Among respondents who did not previously own Bitcoin, 11% indicated they were very or somewhat likely to purchase a Bitcoin ETF.

The study found that ETFs help advisors with limited options for providing clients with Bitcoin exposure. Those polled expect only 5-10% of their clients to own a Bitcoin ETF unless the price of Bitcoin continues to rise.

At the time of going to press, Bitcoin is changing hands at around $41,000. This is about 148 percent higher than at the beginning of 2023.

Bitcoin price spikes before and after bitcoin halvings. The next one, expected to happen at the end of April 2024, will reduce the reward for a successfully mined block from 6.25 BTC to 3.125 BTC. If the recent rally goes through in Bitcoin's price, the event could increase Bitcoin's price independent of actual ETF validation.

Read More: What Causes Bitcoins Volatility?

Investors are looking for quality: 21 shares

According to Ophelia Snyder, co-founder of crypto ETF provider 21Shares, the appeal of a Bitcoin ETF depends in part on the quality of the offering.

“Is what you're bringing to market high quality? Because… the world is sick of crypto products that are more expensive and less good than what you normally get. That doesn't work anymore. So it becomes a question of whether you will bring something of high quality. [and] Can you do it fast? And can you really help customers? “

ARK Invest and 21Shares filed in April to launch a Bitcoin ETF ahead of BlackRock, the world's largest asset manager. BlackRock and several other applicants are reportedly finalizing their ETF applications with the US Securities and Exchange Commission (SEC).

The regulator has until January 10, 2024 to respond to the ARK application.

Read more: How to prepare for a Bitcoin ETF: A step-by-step approach

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