Nickel: Launch of Bitcoin ETFs has transformed crypto investing

July 11, 2024

The surge in Bitcoin ETF launches and funds flowing into the sector is transforming institutional investment in digital assets but arbitrage focused hedge funds are still the most attractive way to invest, according to new global research by London-based Nickel Digital Asset Management (Nickel), Europe’s leading regulated and award-winning, regulated digital assets hedge fund manager.

Its study with pension funds, insurers, family offices, wealth managers and other professional investors already invested in the sector found 77% expect the flow of funds into Bitcoin ETFs to increase over the next 12 months with 13% predicting dramatic increases.

The institutional investors and wealth managers questioned in the US, UK, Germany, Switzerland, Singapore, Brazil and the United Arab Emirates who collectively manage around $1.7 trillion in assets agree the mainstream adoption of crypto ETFs will have wider and more profound impacts on the sector.

Bitcoin ETFs are seen as delivering a range of benefits including lower costs, increased liquidity within established regulatory frameworks and reporting as well as enabling institutional investors to avoid the complexities and risks associated with self-custody.

Institutional investors and wealth managers questioned all agree that the widespread adoption of Bitcoin ETFs is putting pressure on regulators to put comprehensive regulatory frameworks and standardised definitions and classifications in place with 29% strongly agreeing.

However, the research shows arbitrage-focused hedge funds are regarded as the most attractive way for investors to gain exposure to digital assets ahead of ETFs or ETPs.

The latter, in turn, are seen as more attractive than a passively held diversified portfolio of digital assets or an actively managed diversified long-only portfolio of digital assets. The approach rated fifth in the research was an actively managed diversified long-short portfolio of digital assets.