Goldman Sachs Comments on Commencing Trading of Spot Bitcoin ETFs in the U.S.!

  • According to a Goldman Sachs report, institutional investors may benefit from the approval of spot Bitcoin (BTC) exchange-traded funds (ETFs).
  • The bank stated that investors would be exposed to BTC without having to take on the risks of self-custody.
  • The note also mentioned that ETF trading hours are limited to default market hours, unlike the 24/7 continuous trading available on crypto native exchanges.

Banking giant Goldman Sachs shared its views for institutional investors in the report published for Spot Bitcoin ETFs.

Goldman Sachs Comments on Spot Bitcoin ETFs

Bitcoin-BTC

According to a Goldman Sachs report, institutional investors may benefit from the approval of spot Bitcoin (BTC) exchange-traded funds (ETFs) as these products will enable them to trade with low management fees and participate more effectively in arbitrage strategies and option hedge transactions.

Spot Bitcoin ETFs were approved in the U.S. on Wednesday, ten years after being first proposed, representing a significant milestone that dramatically expands access to the world’s largest cryptocurrency. These groundbreaking products will start trading today.

Among other advantages, the report stated, “Investor protection provided by ETFs, better liquidity compared to BTC access through private funds due to trading ability with low tracking error; uses standard accounting and reporting processes in the context of ETF intermediary portfolio management, low tracking error compared to closed-end funds and trusts.”

The bank emphasized that investors would be exposed to BTC without having to take on the risks of self-custody, adding that the participation of household ETF providers like BlackRock and Fidelity brings “experience and reliability in managing these instruments.” Goldman also cautioned investors to be cautious about potential disadvantages.

Institutional demand may not materialize immediately

Stating, “Time and demand may not materialize immediately among institutional investors,” the bank warned, “long-term sustainable demand for spot BTC ETFs will be subject to product suitability and broader market adoption criteria,” adding, “Investors do not own physical BTC and are dependent on the ETF manager’s ability to effectively implement the management strategy, which involves a series of risks.”

The note also pointed out that ETF trading hours are limited to default market hours, unlike the 24/7 continuous trading available on crypto native exchanges. The report also added that caution should be exercised against potential risks for market volatility after the approvals.

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