HomeOPINIONWhy are Hedge Fund Firms applying for Bitcoin ETF?

Why are Hedge Fund Firms applying for Bitcoin ETF?


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Today, numerous hedge fund firms are now filing for Bitcoin ETF to meet up with the evolving demands in the investment industry. It is not in doubt that the grandfather of crypto is growing in mainstream popularity and adoption. Investors have no doubt about the potential of Bitcoin and believe their exposure to it is a risk worth taking.

What you need to know about Bitcoin ETF

Certainly, with Bitcoin ETF, these users can now be able to get indirect exposure to the crypto through their accounts on traditional exchanges. Yes, as exchange-traded funds, they are traded on traditional exchanges and not crypto exchanges.

Meanwhile, firms that get approval for Bitcoin ETF buy and hold Bitcoin. Then, they offer fractionalized shares of their Bitcoin holdings on an exchange to customers. Through the investment strategy, investors trade in line with their budget, risk tolerance, and investing goals.

In a nutshell, the ETF allows average investors to get indirect exposure to Bitcoin without necessarily buying them on exchanges. By doing so, it helps them escape security procedures that could have been observed to hold and trade the assets. Exposure to ETF does not require you to technically hold the crypto. You only own the shares; thereby taking the responsibility of keeping them securely away from you.

At the moment, the United States Securities and Exchange Commission is yet to approve Bitcoin ETF for hedge funds that hold the token. But it has already approved Bitcoin ETFs connected to Bitcoin futures contracts running on the Chicago Mercantile Exchange (CME). However, BlackRock is the latest asset management firm to file for a Bitcoin ETF. It is worth noting that the firm is the largest asset management firm in the world, with not less than $9 trillion under its custody. As SEC continues to reject spot Bitcoin ETFs, saying they are not safe enough, experts believe BlackRock has what it takes to get an approval.

Why Hedge Funds are filing for Bitcoin ETFs

Bitcoin ETF provides one of the best ways investors can invest in crypto assets without them directly owning or storing them. The recent efforts of various hedge funds to offer Bitcoin ETFs are pointers to how cryptocurrency has received remarkable acceptance. Despite the SEC’s refusal to grant Grayscale’s approval, indeed without a doubt, the flooding of Bitcoin ETFs applications by hedge funds like BlackRock, WisdomTree, and Invesco on the SEC’s table should trigger optimism among investors. 

If approved, investors will enjoy various pathways that’ll allow them to invest in Bitcoin without directly having exposure to it. Also, it will encourage investors to embrace portfolio diversification due to how ETF can hold various assets. More so, it will provide investors with professional management of their funds, daily liquidity, trading flexibility, tax benefits, and low-cost management.

However, the growing struggle of hedge funds to offer Bitcoin ETF can be seen as an attempt to offer crypto investors another pathway to invest after the recent clampdown on cryptocurrency exchanges. The SEC has been on somewhat of a crusade against cryptocurrency exchanges as it filed lawsuits against Binance and Coinbase. Over the years, the activities of the SEC have forced crypto firms to exit the U.S.

The recent clampdown on cryptocurrency exchanges can reduce investment in Bitcoin and other virtual assets. Now, Bitcoin ETF will provide a means of trading the crypto asset on Stock Exchanges like the New York Stock Exchange. By that, investors will enjoy other alternatives instead of trading Bitcoin on a typical cryptocurrency exchange. 


For the crypto space, the efforts of BlackRock, WisdomTree, and Invesco are signs of how the crypto space has grown in acceptance over the years. It will protect investors against unexpected regulatory assault as Bitcoin ETF is directly regulated by the SEC. Owing to that, investors will enjoy protection against riskier investment alternatives like unregulated or dubious projects.

In another positive development, the availability of more Bitcoin ETF service will help establish a connection between cryptocurrency and stocks. By that, investors will enjoy having Bitcoin and stocks like Netflix, and Amazon in a single portfolio. Above all, more Bitcoin ETFs will be to the advantage of investors. 

Olaleye Komolafe
Olaleye Komolafe
Olaleye is a professional reporter with vast experience in web3, cryptocurrencies, and NFT journalism. He enjoys writing about the evolving metaverse sphere and the prevalence in the crypto sphere. Notably, some of his contents have been published in numerous international publications. Away from the crypto world, Olaleye is a political scientist and a lover of football

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