Goldman Sachs Analysts: New Bitcoin ETFs in the US Will Attract Major Investors

The approval of spot Bitcoin ETFs by the US Securities and Exchange Commission has generated a buzz in the financial world. Goldman Sachs analysts believe this move will revolutionize how large organizations engage with Bitcoin. Until recently, acquiring Bitcoin for large companies posed numerous risks and complexities. Companies had to establish infrastructure to ensure the secure storage of their coins before they could make direct purchases.

However, the risk of theft due to hacking attacks and vulnerabilities remained a significant concern. This deterred many publicly traded companies, apart from a few major players like MicroStrategy and Tesla, from entering the Bitcoin market.

The introduction of spot Bitcoin ETFs changes the game entirely. Institutional investors can now buy shares in exchange-traded funds, the value of which depends on Bitcoin's price in traditional spot markets. Importantly, they no longer need to worry about coin security, as specialized custodian companies, such as Coinbase, will manage that aspect of this investment vehicle.

Goldman Sachs analysts list several advantages of ETFs in their report. These include investor protection, better liquidity compared to private funds, and lower price tracking error compared to closed-end funds and trusts.

Among the approved ETF managers are industry giants like BlackRock and Fidelity, known for their strong reputation in traditional finance. They possess the experience and resources to manage these new investment instruments effectively.

Despite the excitement surrounding ETF approval, experts acknowledge a key drawback compared to spot trading in Bitcoin – trading hours. ETF transactions are limited to standard market hours, unlike direct Bitcoin trading, which is available 24/7. However, for major investment players, this limitation is unlikely to pose a problem as their investments typically have a longer-term perspective.

Spot Bitcoin ETF trading began on January 11, 2024, with an unprecedented demand from investors. In the first 30 minutes of market opening, trading volume reached $1.6 billion, and by the end of the day, it had surpassed $4.6 billion. These results signal a successful launch for this new product in the market.

Grayscale, BlackRock, and Fidelity products accounted for nearly half of the trading volume. Among the eleven registered ETFs, Grayscale (GBTC), BlackRock (IBIT), Fidelity (FBTC), and Ark (ARKB) were the top performers, with market capitalizations of $667.55 million, $475.6 million, $291.1 million, and $117.8 million, respectively.

Overall, the cryptocurrency community is currently in a state of euphoria, as evidenced by new local highs in the Alternative Fear and Greed Index. However, these levels are still far from the peaks of the previous bull run in 2021.

Contrary to some predictions, Bitcoin's price did not plummet following the approval of spot ETFs. Currently, Bitcoin hovers around $46,000, while Ethereum has shown a 15% increase in value over the past week.