The recent approval of spot Bitcoin (BTC) exchange-traded funds (ETFs) presents an opportunity for increased adoption and investment in cryptocurrencies, according to Coinbase experts. However, David Duong, Head of Institutional Research at Coinbase, notes that the impact may not be immediate.
In a recent post, Duong cites three key challenges to significant near-term flows into Bitcoin ETFs. Firstly, Bitcoin’s status as a relatively new asset class poses difficulties in predicting potential flows. Secondly, the altered landscape of capital availability compared to two years ago complicates the analysis of current flows. Lastly, Duong notes the path dependency of cash flows, emphasizing various factors influencing initial allocations to ETFs.
Duong stated: “When those conversations are enabled, this may affect flows in both directions depending on market positioning, competitors’ expense ratios and liquidity.”
Overall, Duong suggests focusing on the long-term possibilities rather than short-term inflows. While spot Bitcoin ETFs have the potential to bring billions into crypto markets, realizing this potential will take time.