- Interest rates have been waning over the past 30 years
- Investor demand for crypto allocation growing
- About $20 trillion in hands of financial managers
The crypto market continues to attract investors as digital assets see huge gains, led by Bitcoin’s surge to highs of $67,000 in October.
Institutional demand has been high, with capital inflows into Bitcoin products and funds positive for over six straight weeks. Last week, anticipation for and then the debut of a Bitcoin-based futures exchange-traded fund drove investor interest through the roof, with over $1 billion in volume gobbled on the first day when the ProShares Bitcoin Strategy ETF opened on the New York Stock Exchange (NYSE).
Now a CEO with an ETF-focused firm says interest in cryptocurrency could see demand in crypto ETFs balloon. According to the exec, there’s a $20 trillion market eyeing the Bitcoin Futures ETF market.
Demand for crypto allocation high
According to ETF Trends CEO Tom Lydon, the last 30 years have seen a steady decline in interest rates, and investors are looking for alternative investments.
Lydon said this while speaking to CNBC’s “ETF Edge”. He noted:
“With inflation, with the demand for alternative investments and the current trend in the cryptocurrency area, there’s a lot of pressure on advisors to take a stake.”
Lydon’s remarks come at a time when the crypto market continues to wait on the SEC to clear the first spot Bitcoin ETF. In a recent interview, Valkyrie CIO Steven McClurg said approval for a physically-settled Bitcoin ETF might not happen before mid-2022.
McClurg cites regulation around crypto exchanges as one of the factors delaying the eventual clearance of a spot-based ETF. It is these delays that are seeing many investors eye the futures-based ETFs market.
$20 trillion demand curve
The ProShares and Valkyrie ETF products have done well since their respective debuts, with the positive vibes likely to see trillions of dollars enter the market.
Earlier this year, a Bitwise/ETF Trends study showed a 50% jump in financial managers looking to put capital into crypto funds. Huge returns and better inflation hedge from Bitcoin proved to be most manager’s pull factors, but according to Lydon, futures-based Bitcoin ETFs could be the main attraction for investors heading into the traditionally bullish holidays season.
“There’s this whole middle market where financial advisors manage about $20 trillion that really don’t have the best solution right now. And right now, it appears that the futures-based ETF might be that,” Lydon said during the show.
With BTC price forecast to soar beyond $100k during the current bull cycle, the ETF Trends CEO sees demand for Bitcoin and related products is only beginning to shape up. In his view, this will not wane “anytime soon.”
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