Brian McGleenon
Thu, 15 February 2024
Bitcoin (BTC-USD) spot ETFs could see an influx of capital from US pension plan managers, according to an analyst. This expectation could indicate a broader acceptance and adoption of bitcoin-related investments within retirement portfolios.
On this week's episode of Yahoo Finance Future Focus, Standard Chartered (STAN.L) head of crypto research Geoff Kendrick shared his insights into the evolving cryptocurrency landscape where traditional finance incumbents, such BlackRock (BLK) and Franklin Templeton (BEN), are participating via the recently launched spot bitcoin exchange traded funds (ETFs).
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Following the increased inflows from asset managers into the eleven existent spot bitcoin ETFs, Kendrick expects participants from the US 401(k) market, such as retirement fund managers, to begin allocating into the newly launched funds.
"What we now see in the US is the 401(K) market, such as pensions, enter bitcoin and other assets in this space, when we get the spot ether ETF in May, for the first time," Kendrick told Yahoo Finance.
According to data from the Investment Company Group (ICI), 401(k) plans hold $6.9tn (£5.5tn) in assets, in more than 710,000 plans, on behalf of about 70 million active participants and millions of former employees and retirees.
Spot bitcoin ETF inflows
Kendrick told Yahoo Finance UK that in total he expects "around $50bn to $100bn in net inflows into spot bitcoin ETFs in 2024."
A spot bitcoin ETF is a financial product that investors hope will pave the way for mainstream capital to flood the crypto market. Currently, the indications are favorable, with fund managers having allocated over $4bn in net inflows to the eleven spot bitcoin ETFs since they were approved by the US Securities and Exchange Commission (SEC) on 11 January.
Spot ether ETFs anticipated
Kendrick also expressed optimism about the possibility of a spot ether ETF (ETH-USD) being approved by the SEC, marking out 23 May as a potential date. He added that this is expected to contribute to positive market sentiment and suggested that net inflows into anticipated spot ether ETFs in 2024 could reach between $20bn and $35bn by the end of year.
Read more: Bitcoin success with SEC fuels anticipation for ether spot ETF
Kendrick noted that the excess demand might surpass that seen surrounding the approval of bitcoin's spot ETFs. He emphasised the smaller size of proxies, such as the Grayscale Ethereum Trust, which may impact supply and demand dynamics for ether.
"It's likely the price impact will be even greater for ether than it has been for bitcoin in the run-up to the approval of a spot ether ETF. That's partly because the proxies, such as the European ETFs, the Canadian ETFs and the Grayscale Trust for ether are smaller as a percentage of market cap than they are in bitcoin. So the build up of excess demand is more likely to be even larger for ether than it was for bitcoin," he said.
Kendrick said that, despite recent volatility in US Treasury yields and a potential delay in a US Federal Reserve rate cut, bitcoin and ether, along with other risk assets, have performed well.
As the market broadens, he anticipates increased liquidity and the emergence of options for both spot bitcoin and spot ether ETFs, signaling a new phase in the maturity of the cryptocurrency investment landscape.
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