With Bitcoin spot ETFs on the horizon, investors are questioning whether asset managers like BlackRock can exploit insider knowledge to gain an advantage before these highly anticipated funds are launched. In an X Space interview, Bloomberg ETF analyst James Seyffart sheds light on BlackRock’s actions and their impact on the Bitcoin market. Seyffart clarifies that BlackRock cannot manipulate the market prior to approval and discusses the company’s approach to customer claims.
According to Seyffart, ETF applicants, including BlackRock, will only start purchasing BTC shortly before the actual launch of their funds. This is done to “seed” the ETF with funds in advance, ensuring that it is prepared to sell shares to investors once it goes live. Seyffart emphasizes that the purpose of this seeding process is not to maintain exposure by holding Bitcoin on their balance sheets. He dismisses the notion that BlackRock is actively front running the market, highlighting the overhyped perception around their actions.
Seyffart clarifies that BlackRock is still capable of investing in Bitcoin through other means, such as their private Bitcoin trust. If customers are already purchasing BTC ahead of the ETF approval, BlackRock may opt to invest in alternative Bitcoin funds. In recent months, inflows to such funds, including Canadian Bitcoin ETFs and futures-based products in the United States, have reached record levels due to the anticipation of ETF approvals. Seyffart adds that a significant turning point was Grayscale’s court victory over the Securities and Exchange Commission (SEC) in August, providing renewed hope for ETF approvals.
BlackRock’s S-1 filing in October revealed plans to seed their fund with $100,000 prior to launch. However, an updated filing on Friday disclosed an increase to $10 million, scheduled for January 3. Analysts, including Seyffart, predict that multiple Bitcoin spot ETFs will receive approval between January 5 and January 10. Interestingly, the bearish sentiment in Bitcoin derivatives markets before the approval date suggests that many investors anticipate a “sell the news” event. Nevertheless, former NYSE President Tom Farley and others believe that an ETF approval will stimulate substantial investment in the industry.
Contrary to speculation, Bloomberg analyst James Seyffart emphasizes that BlackRock cannot front run Bitcoin ETF approvals. The company follows a standardized process of seeding ETFs shortly before their launch, without actively buying Bitcoin to maintain exposure. While BlackRock can still invest in BTC through private products, Seyffart believes that the recent court victory by Grayscale over the SEC has increased the likelihood of ETF approval. With multiple approvals expected in early January, the market sentiment surrounding the event remains divided, with some anticipating a sell-off and others anticipating an influx of funds. Ultimately, the future of Bitcoin ETFs hangs in the balance, promising potential market shifts and new opportunities for investors.