21Shares President Forecasts Bitcoin ETF Market to Shrink then Consolidate
21Shares president Ophelia Snyder projects a broader gap between the leading Bitcoin exchange-traded funds (ETFs) issuers and the chasing pack. The executive considers that the Bitcoin ETF will shrink before consolidating around the leaders.
Synder considers that while the Bitcoin ETFs realize the long-projected success, a yawning gap emerges that the biggest issuers set, leaving the rest a distance back. The 21Shares president considers that the segment will shrink to a smaller field by 2025.
Synder perspectives, as captured in the Decrypt publication, illustrate that the segment would shrink to 3-5 winners. The 21Shares executive echoed last month’s view that spot Bitcoin ETFs have realized expectations since their unveiling on January 10. Nonetheless, they have portrayed the unexpected.
21Shares President Considers Investment Inflow to ETFs Positive
Synder ranks the investment amount flowing into the ETFs as positive. She considers the segment achievements attractive, particularly witnessing the market’s receptive nature, considering that none of the most prominent financial players has declared entry.
Synder indicated that in the absence of the players that the spot Bitcoin ETF issuers projected, the newly approved product is proving to be the most successful ETF launched. The 21Shares president declared the activity only the start of the gun firing.
Bitcoin ETFs involve investment products, allowing buyers to realize exposure to Bitcoin without directly holding and acquiring the token. Such is set to eliminate the biggest hurdles crypto-curious investors would face in navigating digital wallets, seed, and crypto exchange processes.
21Shares is among the biggest winners since the SEC approved the spot Bitcoin, ending a decade-long wait that featured rejections. The 21 shares crossed the billion-dollar assets under management (AUM) milestone. The achievement positioned 21Shares in the same tier as BlackRock, Grayscale, and Fidelity, also joined by Bitwise a few days later.
The success approval is a crowning achievement by Ark Invest, among other applicants. Cathie Wood’s investment firm sought SEC’s approval in June 2021 and April 2023, with both attempts rebuffed by the regulator.
Ark Invest joined other applicants who amended their filing following the lead by BlackRock bid in mid-2023. The amendment sought to address the concerns raised by the Commission regarding market manipulation and the inclusion of surveillance-sharing agreements.
Retail Investors Dominate Inflow to ETFs
Synder considers that the early investment behind the flows into ETFs arises from the retail side investors and not the Wall Street brokers and advisors. Snyder believes that from her experience as a veteran within the investment banking space, the hyperactivity by the retail investors is unusual and was expected.
Synder explains that the retail-heavy market attains access faster than advisors would need help to match. The 21Shares investors consider that the scale of the inflow is a pent-up demand overly compressed in the past decade but now flooding into the segment.
Synder considers that banks and brokers unveiling the ETF products offered to the clients portrays a months-long process. However, several firms led by UBS Investment Bank and Charles Schwab recently began offering the products to the clients.
Synder reflects on the move by investor advisor Vanguard to decline involvement in offering spot Bitcoin ETFs, citing the token’s volatility. Other advisers indicated the need for reputation risks and track records to play out before entry.
Synder considers that the conservative advisors acknowledge the success realized by 21Shares and other issuers, though they declare they would not rush into the decision. She displayed the cautionary approach as one purchasing a car, though devoted to checking the tires.
Bitcoin ETF Market to Consolidate
Synder observed that the newly approved spot Bitcoin ETFs are entangled in fierce competition. The rivalry manifests in a fee war that began pre-approval and replicated in the post-approval.
Synder considers that sustaining the fee war risks eroding into the short-term profits of the spot Bitcoin ETF issuers. She believes the longer term would not pose a challenge, considering that the gap between the biggest and smallest players would not narrow.
Synder considers that the smaller ETFs would struggle to compete with the leading peers, particularly those that hit the $1 billion assets. She forecasts that the ETF markets would consolidate around the players offering high trading volumes and liquidity. The process would squeeze the platform for issuers who cannot match them.
Editorial credit: T. Schneider / Shutterstock.com
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