Venture Capitalist says ETFs Might Start Trading Within a Week of Approval

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On Wednesday morning, Matrix Port, a company, released a report suggesting a negative outlook for ETF approvals. This report claimed that the approval of Bitcoin exchange-traded funds (ETFs) might not happen soon. Consequently, the Bitcoin price experienced a 7% decline in response to this information.

In an interview with Laura Shinn of Unchained, venture capitalist Spencer Bogart shared his perspective on this development as the SEC is expected to reach a decision soon. While talking about the concerns, he stressed the market’s sensitivity to short-term negative news. He noted that the reaction might indicate an overbought and fragile market.

He highlighted the market’s strong reaction to what he considered a lack of new information. The report speculated on the political affiliations of some SEC Commissioners, but Bogart found it did not provide any groundbreaking information.

He also touched upon various ETF filings and the significance of different forms. Bogart mentioned the importance of factors such as distribution, brand, liquidity, and expense ratios for ETF success. Regarding fees, he discussed the fee competition among issuers, with companies like Ark Invest and Valkyrie setting their fees. Fidelity opted for a 39% fee, while Invesco Galaxy waived fees for the initial six months.

Spencer speculated on Black Rock’s fees, suggesting they might aim for a lower fee rate given their strong distribution and brand. He pointed out  that fee competition would play a crucial role in the ETF market.

The conversation touched on the potential impact of ETF approval on companies like Grayscale, MicroStrategy, and Coinbase. Grayscale’s legal battles and internal changes were considered in the context of ETF conversion. Spencer suggested that MicroStrategy’s stock might face headwinds, impacting the premium investors pay for its Bitcoin holdings.

Regarding Coinbase, Spencer anticipated a positive impact, with the exchange serving as the custodian for the majority of ETFs. He highlighted the potential increase in trading volume and custody fees for Coinbase.

Spencer offered quick predictions, estimating that ETFs might start trading within a week of approval. He cautiously projected underwhelming short-term flows into spot Bitcoin ETFs but anticipated exceeding expectations in the long term.