The Chicago Board Options Exchange (CBOE), America’s largest options exchange, anticipates that spot Bitcoin exchange-traded funds (ETFs) will usher in a fresh wave of institutional investors.
In a recent interview on Bloomberg TV, CBOE Digital President John Palmer articulated that the approval of such ETFs would not only facilitate greater institutional participation but also stimulate retail interest in Bitcoin derivatives.
Palmer emphasized that this approval could potentially pave the way for pension funds and RIA-based (Registered Investment Advisor) funds to directly invest in spot Bitcoin ETF assets.
Currently, many of these funds face limitations in gaining direct exposure to Bitcoin. He further explained that RIAs are entities registered with federal or state regulatory agencies, specializing in offering investment advice.
As the deadline for the Securities and Exchange Commission (SEC) to decide on the ARK Invest 21 Shares Bitcoin ETF application approaches on January 10, Palmer believes that if approved, Bitcoin derivative products will experience significant expansion.
Institutional players are expected to increasingly utilize these derivatives for risk management purposes.
Palmer acknowledged the difficulty in predicting the exact breakdown of investors but noted that institutions are at the forefront of accessing hedging tools.
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Nevertheless, he expects retail investors to also show interest in these instruments.
CBOE Digital, the cryptocurrency division of the exchange, currently offers crypto futures and options trading.
On January 11, it plans to launch margined Bitcoin and Ether derivatives trading, allowing investors to trade these contracts without the requirement of providing the full collateral.
Simultaneously, some mutual funds are already strategizing to increase their exposure to spot Bitcoin ETFs upon approval.
On January 2, Advisors Preferred Trust, a mutual fund manager, modified its prospectus to allow the fund to invest up to 15% of its total assets indirectly in Bitcoin.
This exposure would be achieved through investments in shares of Grayscale Bitcoin Trust, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts.
In conclusion, the potential approval of spot Bitcoin ETFs is poised to reshape the landscape of institutional and retail investments in cryptocurrencies, providing greater accessibility and hedging opportunities for a broader range of investors.
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