Due Diligence slows down the adoption of Spot Bitcoin ETF
On January 10, 2024, the US SEC approved applications for Bitcoin ETFs, encouraging optimism among crypto enthusiasts. There was a momentary rise in the valuation, but that has calmed down now. While the Bitcoin ETF has paved the way for more crypto ETF applications to surface in the future, its adoption has considerably slowed down.
Several financial institutions comply with due diligence before listing the product on the platform. This means that institutions are checking Bitcoin ETFs for risks, facts, and opportunities. No firm has denied listing the product, but they have said that only after they have conducted due diligence will they list the product, making it available for their customers.
For instance, LPL Financial Holdings is said to have completed the due diligence in the next three months. One major factor that LPL is evaluating is the possibility of its closure in the event that it does not accumulate significant assets. Rob Pettman has said that they are basically trying to see how it works.
The VP of Wealth Management Solution at LPL Financial Holdings has added that listing the wrong product can be a negative experience for customers, especially when a firm is a financial advisor with the core task of helping to facilitate such products. Rob has also said that listing and facilitating any product is incredibly costly for them.
With an asset under management of $1.4 trillion, LPL Financial intends to finish its investigation into Bitcoin exchange-traded funds (ETFs) within three months.
Many crypto-tied products will close down in 2023, including, but not limited to, the Volt Crypto Industry and VanEck Digital Assets Mining ETF, also known as DAM. Reports estimate that 253 ETFs have closed in the previous year, with an average asset value of $34 million.
It remains to be seen how these developments affect the price of BTC. The crypto is up by 0.32%, finally surpassing the milestone of $43k to trade at $43,084.83 at the time of writing this article. The market cap and 24-hour volume are also up by 0.32% and 21.87%, respectively.
As of January 31, 2024, Bitcoin ETFs approved by the Commission held approximately $27 billion worth of 656,421 BTC tokens. One of the many factors that have affected their performance is the outflow by GBTC, which is the Grayscale Bitcoin Trust. It has drained 132,195 tokens after converting to the listed ETF.
Until Bitcoin Spot ETFs face due diligence, there will likely be a slowdown in the market. There is no timeline, or date, by which one expects the ETF to gain its true pace. Till then, BTC is on a journey to make a recovery if it wants to surpass the popular landmark of $100k. Predictions estimate that Bitcoin will do so by the end of 2025, or a maximum of 2026.
Moving forward, word from advisors like LPL Financial Holdings is awaited.
