Following the recent announcement of BlackRock’s spot Bitcoin ETF application, there has been a notable increase in the proportion of Bitcoin supply held or traded by entities based in the United States.
Following the recent announcement of BlackRock’s spot Bitcoin ETF application, there has been a notable increase in the proportion of Bitcoin supply held or traded by entities based in the United States. The report, released by Glassnode, notes a potential inflection point in the dominance of Bitcoin’s supply if the trend continues.
Mixed Reaction over the Filing
BlackRock’s ETF filing has generated mixed sentiments in the market. While some anticipate that the proposal by the $10 trillion asset manager could attract more institutional investors, others express concerns about potential risks to the Bitcoin market.
In a recent interview with Fox News, BlackRock CEO Larry Fink shared bullish remarks about Bitcoin, highlighting its role as an alternative to gold. Fink emphasized that Bitcoin’s international nature and independence from any single currency make it an attractive asset for individuals seeking alternatives to hedge against inflation and currency devaluation.
This confidence might be prompted by the fact that BlackRock is a spot ETF: a cryptocurrency backed by physical Bitcoins. It offers a more secure and dirct way to gain exposure to bit coin.
However, Cathie Wood, CEO of Ark Invest, expressed doubts about the approval of BlackRock’s ETF proposal by the Securities and Exchange Commission (SEC). Wood mentioned the inclusion of a surveillance clause in BlackRock’s prospectus. She further stated that Ark Invest is ready to amend its prospectus accordingly, noting that exchanges are moving in the same direction.
Changing Landscapes
Previously, Asia had held a dominant position in Bitcoin supply due to its favorable regulatory environment. However, the recent surge in ETF filings in the US has led to a shift in BTC ownership.
US entities are poised to regain influence and control over the leading cryptocurrency’s supply. Glassnode’s data reveals that the dominance of US entities in BTC supply, which had declined in 2020-2021, is now on the rise again.
The changing dynamics in BTC supply dominance can be attributed to regulatory activities in the US. Recent actions by the SEC against prominent exchanges like Coinbase and Binance caused a bit of a shakeup. As a result, some US-based entities have expressed intentions to relocate their operations offshore due to regulatory scrutiny.
Despite Asia’s historically receptive approach to cryptocurrencies, the recent developments in the US, including multiple Bitcoin ETF filings, have prompted a shift in supply dominance back to US entities. This created a see-saw effect of holdings declining in Asia.
As of this report, Bitcoin is trading at $30,274, displaying signs of a potential comeback and a possible retest of its recent high at $30,403 in the near future.
Banking Giant Unimpressed
In a research report, JPMorgan expressed its belief that the potential approval of a spot ETF by SEC would not significantly impact the crypto markets. Despite the SEC receiving numerous ETF applications, there is growing optimism that the regulator may approve one, with recent filings addressing previous concerns.
While spot bitcoin ETFs have been available in Canada and Europe, they have failed to attract substantial investor interest, according to JPMorgan’s analysts led by Nikolaos Panigirtzoglou. The filing by BlackRock’s subsidiary for a spot bitcoin ETF has prompted other asset managers like Invesco and Wisdom Tree to either apply or reapply for similar offerings.
JPMorgan’s report noted that bitcoin funds, including those based on futures and physically backed options, have seen limited investor interest since Q2 2021. These funds have also failed to benefit from outflows from gold ETFs over the past year.
Whether the recent filing could shake the ground or go by with a fleeting notice, the answer remains yet to be seen.
