Regarding Bitcoin spot ETF, 5 key information that you must pay attention to now

As the approval of a Bitcoin spot ETF approaches, market attention is growing. Several asset managers are gearing up to prepare, while analysts and issuers are predicting that the U.S. Securities and Exchange Commission (SEC) may make a favorable decision on or before January 10.

This decision is not only related to the price changes of Bitcoin, but will also become a turning point for the entire cryptocurrency market. If the adoption of the Bitcoin spot ETF is inevitable, then how should we learn the news of its approval as soon as possible, and what information should we focus on?

How to Stay One Step Ahead in ETF News?

In addition to subscribing to professional financial news websites, are there any other ways to stay ahead of the media in getting the latest news?

1. U.S. Securities and Exchange Commission (SEC) official website

You can register on the SEC’s official website and provide your email address to receive official news and decisions regarding Bitcoin ETFs and other related information. As a regulatory body, the information released by the SEC is the most authoritative and accurate.

2. Seasoned Industry Experts and Analysts

Some renowned industry analysts, such as Bloomberg ETF analysts Eric Balchunas and James Seyffart, have conducted in-depth research and have insights into Bitcoin ETFs. Following their social media accounts can provide you with more professional analysis and predictions, and turning on notifications will ensure you receive news as soon as possible.

3. Market Prices and Trading Volume

To be honest, market price is often the fastest signal. Any major news related to the Bitcoin ETF is likely to be quickly reflected in Bitcoin’s price and trading volume, or even start early. Therefore, paying close attention to changes in market prices and trading volumes is also an important means of obtaining information.

Approval collectively or individually

ETF analysts and issuers unanimously believe that the SEC will make a favorable decision by January 10th or earlier. January 10th is the deadline for the SEC to decide whether to approve the Bitcoin spot ETF applications submitted by ARK Investment Management LLC and 21Shares, which are both highly anticipated.

It is difficult for the SEC to approve only one Bitcoin spot ETF, just like when Bitcoin futures were launched. If they approve only one, it may create market share imbalances, and the ETFs that are introduced later may lower their purchase criteria. This could lead to a capital outflow from the market, so the SEC needs to promote and maintain market fairness.

Therefore, in this round of approvals in January, the SEC will only approve one or multiple Bitcoin ETFs, which is also one of the key points that the market is extremely concerned about.

Authorized Participants (APs): Key Players in the ETF Market

Authorized Participants (AP) play a vital role in the exchange-traded fund (ETF) industry. These are typically large financial institutions, such as investment banks or market makers, who play an integral role in the ETF market and are responsible for maintaining ETF liquidity and market efficiency. APs’ core responsibilities include creating and redeeming ETF shares, which means they have the authority to transact directly with the ETF provider, whether to create new ETF shares or eliminate existing ones.

Additionally, AP plays a key role in maintaining consistency between market prices and NAV. They help ensure that the market price of an ETF is close to the net asset value (NAV) of its underlying assets by creating or redeeming ETF shares when necessary, thereby reducing price deviations and improving market efficiency. AP also serves as a provider of market liquidity, making it easier for investors to buy and sell ETF shares through its creation and redemption activities. As large financial institutions, they are also responsible for managing the market and liquidity risks associated with the creation and redemption of ETF shares.

Given the complexities associated with ETF creation and redemption, APs are typically institutions with a high degree of expertise and market operations capabilities. In situations of high market volatility or low liquidity, the activities of APs are particularly important in ensuring the health of the ETF market. Through the AP mechanism, ETFs can more effectively track the performance of their underlying assets while providing investors with a more stable and reliable trading environment.

According to the latest information, most of the asset management companies that are applying for Bitcoin spot ETFs, including BlackRock, have selected and announced their respective authorized participants.

For example, BlackRock plans to select JPMorgan Securities and Jane Street as its authorized participants. Grayscale CEO posted on social media that Grayscale had already confirmed in the documents submitted in May this year that after GBTC was converted into a spot ETF, Jane Street Capital and Virtu Americas were the authorized traders (Authorized Participants) of its ETF.

Goldman Sachs is approaching BlackRock and Grayscale and in talks to become an authorized participant (AP) for its spot Bitcoin ETF. According to Nate Geraci, president of The ETF Store, disclosed on social media, following Goldman Sachs, JPMorgan Chase is also negotiating with Grayscale to serve as an authorized participant of its spot Bitcoin ETF.

WisdomTree has filed the latest revised S-1 filing for its spot Bitcoin ETF, appointing Jane Street Capital as its authorized dealer (Authorized Participant) for its spot Bitcoin ETF. Invesco Galaxy has appointed JP Morgan and Virtu Americas as authorized dealers for its spot Bitcoin ETF, which will charge no fees for the first six months. Fidelity named Jane Street an authorized dealer for its spot Bitcoin ETF, which charges 0.39%.

Fidelity named Jane Street Capital as one of its authorized participants. Invesco/Galaxy selected JPMorgan and Virtu as authorized participants. Valkyrie selected Jane Street and Cantor Fitzgerald as its authorized participants.

This information may change as subsequent approval processes and individual company policies change. But what can be seen is that Jane Street is the choice of almost all these asset management companies.

ETF Fees: Key Factors Influencing Investor Choice

In the fierce competition of Bitcoin spot ETFs, the fees set by each company are of crucial importance. This not only affects investors’ choices but also significantly impacts the companies’ market competitiveness. As the management cost borne by investors, the ETF fees directly relate to investment returns. Therefore, when choosing ETF products, investors often prioritize options with lower fees.

Currently, VanEck leads the market with its ETF fee rate set at 0.25%, which makes its product more attractive to price-sensitive investors. The low fee strategy not only enhances Fidelity’s market competitiveness but may also force other competitors to adjust their fee structures.

Fidelity has a fee rate of 0.39%, BlackRock’s ETF fee rate is 0.3%, and it was 0.2% for the first 12 months.

Meanwhile, ARK 21shares has a fee rate of 0.25%, with the first 6 months being free. Although Invesco announced a fee rate of 0.59%, it also chose to waive fees for the initial six months. This can be seen as a proactive market entry strategy aimed at quickly attracting a customer base and increasing market share. This short-term fee discount may appeal to investors seeking initial cost benefits.

Invesco has also designated JP Morgan and Virtu Americas as authorized market makers for its Bitcoin spot ETF. This collaboration with well-known financial institutions may further enhance the attractiveness of its product.

At the same time, Fidelity has chosen Jane Street as the authorized market maker for its Bitcoin spot ETF and has maintained its low fee rate. This reflects its focus on both maintaining cost competitiveness and collaborating with high-quality trading partners.

Overall, the competition in the Bitcoin spot ETF market is reflected not only in the quality of products and services but also in fee strategies. The level of fees directly affects investors’ choices, and in this competitive market, major companies attract and retain customers through different fee strategies. The effectiveness of these strategies will be validated in future market performance.

Image source: @JSeyff

The Turning Point for GBTC: Approved to Become a Bitcoin Spot ETF?

Regarding whether GBTC will be approved for conversion into a Bitcoin spot ETF on the same day as other companies, this is an important issue of concern in the market. Based on current indications, including executives’ social media tweets, company filings, and other public actions and communications, it seems to suggest that GBTC is preparing to convert and list on the same day as other companies launching Bitcoin spot ETFs.

As one of the largest Bitcoin trust products in the market, GBTC (Grayscale Bitcoin Trust) currently manages around $27 billion in assets. This scale not only holds significant importance in the cryptocurrency field but also gives it great influence in the entire ETF market. Once GBTC successfully converts into a spot Bitcoin ETF and lists, it will immediately become one of the top 60 ETFs in terms of assets under management, resulting in significant impact in the market.

This conversion of GBTC not only signifies changes in its product structure and regulatory framework but may also attract more investors seeking traditional financial products and services. This transformation will shift GBTC from a relatively closed trust structure to a more open and liquid ETF structure, which is an important attraction for investors looking to invest in Bitcoin through traditional financial channels.

Overall, the conversion and listing of GBTC will be a significant milestone in the Bitcoin ETF market. It will not only increase the choices of spot Bitcoin products in the market but also potentially drive further maturity and development in the entire industry. If GBTC can be approved for listing on the same day as other companies, it will be a highly meaningful event for the entire industry, bringing new vitality and competitive dynamics to the Bitcoin ETF market.

Funding Forecast: Capital Attracted by Bitcoin ETF

There are rumors that BlackRock will invest $2 billion. On January 6th, Matthew Sigel, the Head of Digital Asset Research at VanEck, stated during a Twitter Space session that according to insiders, BlackRock has raised $2 billion from existing Bitcoin holders. These funds are expected to be converted into a physically-backed Bitcoin ETF within the first week.

In response to this, Eric Balchunas, an ETF analyst at Bloomberg, said that if this is true, the $2 billion will break all records for first-day/week trading volume and assets under management for an ETF. He has also heard from another source that BlackRock is indeed prepared to invest funds into the ETF on the first day.

Additionally, since August of last year, Ark Invest has gradually reduced its position in GBTC. At that time, many speculated that the reason behind Cathie Wood’s smart move to reduce GBTC holdings was perhaps to prepare for her own Bitcoin physically-backed ETF.

According to the holdings data of ARK Invest’s Ark Funds, in October, they reduced their GBTC holdings by a total of 146,242 shares without any purchases. In September, they bought 11,249 shares of GBTC but sold 67,494 shares. In August, they bought 106,413.91 shares of GBTC but sold 108,776.24 shares.

By December, according to analysts monitored by Bloomberg, ARK Invest had sold over 2 million shares of Grayscale Bitcoin Trust (GBTC), completely liquidating its remaining GBTC position. They used approximately half of the funds, around $100 million, to purchase shares of ProShares Bitcoin Strategy ETF (BITO).

At the same time, co-founder @ETF_Institute, ARK Invest may invest over $200 million to replace GBTC in their ARKW.

Although the news of the inflow amount circulating on the internet has not been officially confirmed, the asset management scales of these investment management companies are not insignificant. It is worth paying attention to how much funds will flow into the Bitcoin ETF if it is approved.

Disclaimer：

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