The Chicago Board Options Exchange (CBOE), America’s largest options exchange, believes that the approval of spot Bitcoin exchange-traded funds (ETFs) will usher in a fresh wave of institutional investors. CBOE Digital president John Palmer, in a January 2 interview on Bloomberg TV, expressed that the green light for such ETFs would pave the way for increased institutional and eventually retail interest in Bitcoin derivatives.
According to Palmer, the approval would enable pension funds and RIA-based funds to invest in spot Bitcoin ETF assets, providing direct exposure to Bitcoin that is currently unavailable to many funds. An RIA, or Registered Investment Advisor, is a company registered with federal or state regulatory agencies to offer investment advice.
The comments by Palmer come as the Securities and Exchange Commission (SEC) faces a January 10 deadline to decide on the approval of the ARK Invest 21 Shares Bitcoin ETF application.
In anticipation of a spot ETF approval, Palmer anticipates a significant expansion in Bitcoin derivatives products. Institutional players are expected to increasingly rely on these derivatives to hedge risks.
While it remains uncertain how the breakdown of investor interest will unfold, Palmer notes that institutions are likely to lead in accessing hedging tools, with retail investors also showing interest.
CBOE Digital, the crypto division of the exchange, is set to launch margined Bitcoin and Ether derivatives trading on January 11, allowing investors to trade contracts without providing the full collateral.
Simultaneously, mutual funds are gearing up for potential exposure to spot Bitcoin ETFs. On January 2, mutual fund manager Advisors Preferred Trust adjusted its prospectus to allow for up to 15% of its total assets to be invested indirectly in Bitcoin through shares of Grayscale Bitcoin Trust, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts once approved.
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