Institutional investors poised to fuel major surge in Bitcoin ETF adoption, Bitwise predicts

Bitwise anticipates a surge in institutional investment into Bitcoin ETFs in the coming months as major financial institutions, known as “wirehouses,” start offering Bitcoin ETF trades to their clients.

Matt Hougan, Bitwise’s Chief Investment Officer, shared a number of insights during a CNBC interview on Feb. 29, stating that the initial interest in Bitcoin ETFs has primarily come from retail investors, hedge funds, and independent financial advisors.

Hougan projected that this trend would soon extend to institutional investors, marking a pivotal moment for Bitcoin that he likened to an “IPO moment.”

Two leading financial institutions, Bank of America’s Merrill Lynch and Wells Fargo, have started to offer spot Bitcoin ETFs to their wealth clients, as reported by Bloomberg on Feb. 29. However, this option is currently only available to clients who specifically request these products. Morgan Stanley is also considering the addition of spot Bitcoin ETFs to its brokerage platform, indicating a growing interest among major financial players in cryptocurrency investment vehicles.

The introduction of Bitcoin ETFs has initiated what Hougan referred to as a “new era of price discovery.” He described the current market dynamics as a scenario where demand significantly outweighs supply, especially when considering the volume of Bitcoin ETFs purchased in comparison to the amount of Bitcoin mined daily and the anticipated impact of the upcoming halving event. This imbalance, according to Hougan, could lead to a substantial increase in Bitcoin prices.

He speculated that the surge in institutional interest could drive Bitcoin’s value to surpass Bitwise’s initial 2024 prediction of $80,000, potentially reaching figures between $100,000 to $200,000 or even higher.

The trading volume of Bitcoin ETFs reached a new daily record on Feb. 28, with approximately $7.7 billion in transactions. This figure surpasses the previous record of $4.7 billion. BlackRock’s iShares Bitcoin ETF (IBIT) significantly contributed to this volume, with nearly $3.3 billion traded, more than doubling its prior record. Additionally, the fund now manages over $9 billion in assets, positioning it at the forefront of new funds in terms of assets under management.

Following closely, Fidelity’s FBTC has amassed over $6 billion in AUM, with ARK/21Shares’ ARKB and Bitwise’s BITB also exceeding the $1 billion AUM mark.

In related developments, Bitwise researcher Ryan Rasmussen provided a balanced outlook on the potential approval of spot Ethereum Exchange-Traded Funds (ETFs) in the forthcoming months. He assessed the chances of approval at 50%, indicating a cautious yet hopeful stance on the expansion of cryptocurrency ETF offerings.