Due diligence delays Bitcoin Spot ETF progress – What you need to know

As reported by Bloomberg, the adoption of spot Bitcoin exchange-traded funds (ETFs) is currently experiencing a slowdown, primarily attributed to extensive due diligence processes conducted by major trading platforms. The hype around Bitcoin ETFs has faced challenges in gaining momentum due to these rigorous evaluation procedures undertaken by large trading platforms. 

The industry players are taking a careful stance, possibly to ensure regulatory compliance and mitigate risks associated with this innovative financial instrument. This delay in adoption is noteworthy, and it reflects the complexities and meticulous scrutiny involved in introducing new financial products related to cryptocurrencies.

Bitcoin ETF adoption hits a snag

According to a recent Bloomberg report, organizations such as LPL Financial Holdings, one of the largest independent broker-dealers in the United States, are thoroughly reviewing newly approved Bitcoin ETFs before making them available to consumers.

LPL Financial, which manages $1.4 trillion in assets, expects to finish its due diligence on Bitcoin ETFs within three months. The business is considering multiple options, including the prospect of ETF closures if it fails to collect large assets.

Due diligence is a thorough analysis conducted before making an investment decision. It entails carefully verifying the data and comprehending the dangers and opportunities.

We just want to see how they work in the markets […] That can be a very negative experience for the investor, for the financial adviser. It’s also incredibly costly for a firm like ours operationally to help to facilitate that. Rob Pettman, vice president of wealth management solutions for LPL Financial

According to Bloomberg, 253 ETFs closed down in 2023, with an average asset value of $34 million. This covers crypto-related products like the VanEck Digital Assets Mining ETF (DAM) and Volt Crypto Industry Revolution.

As of January 31, all Bitcoin ETFs approved last month had 656,421 BTC or approximately $27 billion at current rates. However, the performance of these ETFs has been hampered by outflows from the Grayscale Bitcoin Trust, which sold 132,195 Bitcoin after transitioning from an over-the-counter product to a public ETF.

Crypto market performance

At the time of writing, Bitcoin is worth $43,103.46, down 0.1% from an hour ago and up 0.1% from yesterday. The value of BTC today is 1.9% more than it was seven days ago. In the last 24 hours, the total amount of Bitcoin transactions was $14,208,105,808.

The global crypto market cap is now $1.73 trillion, up 0.71% in the last 24 hours and 56.7% from a year ago. As of today, BTC has a market cap of $845 billion, reflecting a 48.72% domination. Meanwhile, stablecoins’ market cap is $137 billion, accounting for 7.91% of the overall crypto market cap.

According to CoinMarketCap, the current Bitcoin ETF price is $0.000894 USD, with a 24-hour trading volume of $8,644.51 USD. Bitcoin ETF is down 6.49% in the last 24 hours. The current CoinMarketCap rank is #4687. The circulating supply is unavailable, with a maximum quantity of 1,000,000,000 ETF coins.

Anthony Scaramucci has strongly criticized The Economist’s recent article for portraying the nascent Bitcoin ETF industry in a negative light. The piece, which questioned the effectiveness of Bitcoin ETFs following their long-awaited approval by the Securities and Exchange Commission (SEC), ignited debate among crypto enthusiasts.

Scaramucci, known for his optimistic position on cryptocurrencies, questioned the downbeat outlook, asking what constitutes success if a $5 billion ETF debut is deemed unsatisfactory.

It contrasts BTC ETFs’ potential with gold ETFs’ historical performance, demonstrating substantial market dynamics and investor behavior variations. According to the analysis, Bitcoin ETFs may not have the same revolutionary effect as gold ETFs.