Asset Fidelty files bitcoin ETF – but institutional bitcoin demand wanes
In a filing with the U.S. Securities and Exchange Commission (SEC), asset management firm Fidelity has indicated its intention to launch an exchange-traded bitcoin fund (ETF). The „Wise Origin Bitcoin“ ETF is the latest addition to the growing number of ETFs seeking to launch crypto-based financial products in the United States.
If approved, the ETF will use Fidelity’s in-house BTC price index alongside the firm’s digital assets arm. According to Fidelity, its „objective is to seek to track the performance of Bitcoin Era as measured by the performance of the Fidelity Bitcoin Index PR.“
„The [Wise Origin Bitcoin ETF] provides direct exposure to bitcoin, and the trust’s shares are valued on a daily basis using the same methodology used to calculate the index. The Trust offers investors the ability to access the Bitcoin market through a traditional brokerage account without the potential barriers to entry or risks associated with holding or transferring Bitcoin directly, purchasing on a Bitcoin spot market or mining Bitcoin.“
Fidelity is the sixth asset management firm in the United States to register a crypto-based ETF, largely due to a resurgence of institutional interest in cryptocurrencies. Its efforts follow WisdomTree, Valkyrie Digital Assets. VanEck, FirstAdvisors/Skybridge and NYDIG.
Institutional bitcoin demand in decline
The timing of Fidelity’s announcement is interesting, as institutional demand for crypto-based financial products has declined recently. According to asset management firm CoinShares, there has been a „steady decline“ in interest.
Their report states that there has been a large volume decline in bitcoin investment products (go to buy bitcoin cheap platform comparison). They report that last week’s trading volume was $713 million, compared to an average daily inflow of $1.1 billion for all of 2021.
Total inflows into institutional products fell 60% in a single week, from $240 million to $100 million.
Given the current volatility in the crypto market, it is likely that institutions are beginning to rethink the stability and attractiveness of investing in digital assets. In the last month, the prices of „stablecoins“ such as Bitcoin and Ethereum (go to the buy Ethereum guide) have fallen between 5 and 10 per cent overnight.
It’s also important to note that none of the other five bitcoin ETFs have been approved yet, as the SEC remains cautious over potential regulatory risks. Once the dust settles, however, the market will undoubtedly regain its stability and find regulatory clarity.
But until then, institutions will likely wait and see.