Valkyrie Executive Expects Contraction in Bitcoin ETF Sector

Bitcoin ETFs, after high interest, are entering a consolidation period where the number of issuers is expected to decrease by 2024. According to the Valkyrie executive’s forecast, cost and competitive pressure will be effective by the end of the year.

After a rapid start in the market, a decrease in the number of issuers is expected in the Bitcoin ETF sector due to competition and high costs. The number of companies operating in this field by 2024 is anticipated to decrease.

Steven McClurg, Chief Investment Officer of Valkyrie Funds, predicts that the number of issuers will drop from the current 10 to “seven or eight.” McClurg cites high costs, including those for security and custody expenses involved in running a spot ETF, as the reason for this decline.

“I think some issuers will cancel their Bitcoin ETFs because, first, they are not making money. Second, they will never make money.”

ETFs Reached $10 Billion in AUM in the First Month! While a consolidation in the sector is expected by the end of 2024, Bitcoin ETFs have reached a significant milestone in the market. In just one month following the approval on January 10th, nine spot Bitcoin ETFs reached a volume of $10 billion in assets under management (AUM).

A Wave of Consolidation Nears in the Bitcoin ETF Market

McClurg pointed out that an ETF needs to reach a critical asset volume below a $100 million management threshold to be successful. This highlights the challenges some issuers face and why consolidation may be necessary. The market reaction shows that the ETFs, which traded $4.5 billion on their first day, made a strong start and, according to the latest data, continued to see daily inflows of $400 million.

Valkyrie’s $123.7 million in assets under management remains relatively small compared to some major players like BlackRock’s iShares Bitcoin ETF and Fidelity’s Wise Origin Bitcoin Fund, which have assets under management exceeding $3 billion. However, McClurg believes the firm will continue to perform well, especially against similarly leveled competitors, based on its digital asset expertise and traditional market experience.

Source: Decrypt

Previous Article

FTX Management is Selling its $10 Million Investment for $500,000

Next Article

Gas Fees on the Ethereum Network Break a Record with the ERC-404 Craze

Related Posts