Bitcoin ETF Approval Spurs Institutional Interest in Crypto, Study Finds

A recent study suggests that the approval of Bitcoin spot exchange-traded funds (ETFs) in January has attracted significant institutional capital to the digital asset market. Conducted by digital-assets infrastructure provider Aspen Digital, in collaboration with the Family Office Association of Hong Kong and advisory firm SBI Digital Markets, the research highlights the positive impact of ETF approval on the sector’s reputation.

Impact of Bitcoin ETF Approval

The study indicates that the approval of Bitcoin ETFs has led to a surge in institutional interest in digital assets. According to Henri Arslanian, co-founder of crypto hedge fund Nine Blocks Capital, the adoption of the Bitcoin ETF has reduced career risk for allocators looking to invest in crypto.

Institutional Investment Trends

Surveying over 80 family offices, high-net-worth individuals, and asset managers in Asia, the research shows that 76% of respondents are currently investing in digital assets, marking a significant increase from previous studies. The Blackrock’s iShares Bitcoin Trust ETF (IBIT) reached $10 billion in assets under management within its first 49 days on the market.

Market Outlook

Respondents are optimistic about Bitcoin’s future, with 31% predicting the price to reach at least $100,000 by the end of Q4 2024. Factors contributing to this bullish outlook include improving liquidity, rising institutional demand for spot ETFs, and emerging narratives in the crypto space.

Institutional Custody Challenges

Institutional investors have faced challenges with Bitcoin custody in the past due to security risks and regulatory compliance. The approval of spot Bitcoin ETFs has simplified the process, allowing institutions to gain exposure to Bitcoin without directly managing custody.

Room for Growth

While interest in digital assets is growing, the majority of respondents still allocate less than 5% of their total portfolio to these assets. Investment returns, diversification, and inflation hedging are key factors driving investment in digital assets.

Future Outlook

Experts believe that institutional players will continue to enter the crypto space, driven by factors such as regulatory clarity, institutional-grade infrastructure, and increased liquidity. The trend is expected to attract new players to the market, further expanding the crypto investment landscape.