Bitcoin ETFs and the Potential Premium: Is 8% the New Normal? Bitcoin ETFs and the Potential Premium: Is 8% the New Normal?

By: Alex Freidmen

A recent statement by a prominent figure in the ETF industry has sent shockwaves through the market, hinting at potential premiums of up to 8% compared to the actual value of the underlying assets, should the elusive Bitcoin exchange-traded fund (ETF) gain approval.

High Anticipations and Hypotheticals: In an interview with Bloomberg TV, Reggie Browne, head of ETF trading at GTS, suggested that the approval of a Bitcoin ETF could lead to a premium of up to 8% over the actual value of the assets, should it come to pass. This potential discrepancy is in stark contrast to the ProShares Bitcoin Strategy ETF, which, over the past year, has only seen an average premium of 0.02% due to holding Bitcoin futures.

Browne highlighted that the Securities and Exchange Commission’s reluctance to allow broker-dealers to trade spot Bitcoin could add complexity to trading the ETF, potentially leading to a significant premium over the net asset value (NAV).

“It will be some crazy number,” Browne expressed.

Doubts and Spiraling Excitement: His comments arrived just before the SEC’s Wednesday deadline to decide on the numerous spot Bitcoin ETF applications. The ETF market for Bitcoin has been swathed in controversy and garnered attention from the U.S. government. Recently, Max Keiser, a prominent Bitcoin maximalist, cast doubt on the U.S. government’s intentions regarding the potential seizure of all Bitcoin ETFs.

Conversely, the market for Bitcoin and other major cryptocurrencies saw a spike on Monday evening, driven by anticipation for the approval of a spot-based BTC ETF in the U.S. It is widely expected that the approval of these funds could significantly expand the investor base for the asset and attract substantial inflows.

See also  Insightful Analysis on Key Quarterly Releases

Photo by Shutterstock