The Spot Bitcoin ETF may prompt pension funds to explore new investment opportunities

The Chicago Board Options Exchange (CBOE) anticipates that the approval of Spot Bitcoin ETFs, currently under consideration by the U.S. Securities and Exchange Commission (SEC), will usher in a new wave of institutional investors. According to John Palmer, the president of CBOE Digital, the approval would enable pension funds and RIA-based funds to access spot Bitcoin ETFs, presenting a previously unavailable avenue for direct exposure to Bitcoin. This potential development coincides with the impending decision on the ARK Invest 21 Shares Bitcoin ETF application by the SEC, set for January 10.

The Spot Bitcoin ETF may prompt pension funds to explore new investment opportunities

Palmer foresees a significant expansion in Bitcoin derivatives products if the spot ETF gets approval, with institutional players increasingly relying on derivatives for risk hedging. He notes that while it’s challenging to predict the investor breakdown, institutions are likely to lead in adopting hedging tools, yet retail investors will also show interest.

As the crypto division of CBOE, CBOE Digital plans to introduce margined Bitcoin and Ether derivatives trading on January 11, providing investors with the opportunity to trade contracts without the need for full collateral. This move aligns with the evolving landscape of crypto offerings, suggesting a broader market trend toward facilitating diversified investment options.

The introduction of a Spot Bitcoin ETF opens avenues for pension funds to enter the investment arena

In the meantime, certain mutual funds are strategically positioning themselves to capitalize on increased exposure to spot Bitcoin ETFs once regulatory approval is secured.

For instance, on January 2, Advisors Preferred Trust, a mutual fund manager, amended its prospectus to outline plans for allocating “up to 15% of its total assets” to indirectly access Bitcoin. This exposure would be achieved through investments in shares of entities such as Grayscale Bitcoin Trust, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts. This move reflects a growing trend among mutual funds to explore avenues for integrating Bitcoin into their portfolios as the market continues to evolve and embrace cryptocurrency-related investment instruments.