Broker Canaccord Genuity noted in a recent research report that although there has been a lot of talk about the amount of assets under management (AUM) that bitcoin (BTC) exchange-traded funds (ETFs) are attracting, it is now clear that these ETFs are creating extra demand for the underlying cryptocurrency.
Leaders from 29 cryptocurrency-related organisations attended the broker’s 2024 Digital Assets Symposium last Thursday.
Analysts under Joseph Vafi noted, “It is becoming evident that there is also a material multiplier effect underway from the ETFs in driving additional demand for the underlying BTC spot itself.”
According to Swan Bitcoin, an investment advisor focused solely on bitcoin, the broker has observed a significant surge in demand for an underlying spot due to ETFs driving the demand curve to the right, while the supply curve is unable to keep up.
Several investors, both institutional and retail, “find the underlying BTC spot more attractive than ETFs given potentially more ways to hedge and generate yield on HODLs over time as the asset class matures,” according to Canaccord.
Spot bitcoin ETFs will be distributed by major broker/dealer wirehouses and registered investment advisor (RIA) platforms in the upcoming months. According to the report, this additional distribution will compel “investment advisors that could more or less ignore bitcoin to at least have an opinion” on the cryptocurrency.
It is certain that certain establishments, specifically sovereign wealth funds, have already made bitcoin investments. Canaccord anticipates hearing from these investors in the coming months.
The paper also stated that new FASB accounting regulations “may drive more enterprises to follow MicroStrategy (MSTR), at least modestly to look at BTC as an asset to hold on the corporate balance sheet.” This is in addition to ongoing concerns about inflation.