Bitcoin and crypto asset funds currently represent a niche market with an estimated worth of $50 billion, as highlighted by Bernstein Research. Yet, under the leadership of Gautam Chhugani, Bernstein’s team of analysts anticipates these funds may oversee between “$500-650 billion of assets” in the coming five years.
$650B Horizon: Bernstein Envisions Massive Growth in Crypto Funds
Over the next five years, the crypto fund management industry could see significant growth, according to Bernstein analysts. Led by Chhugani, Bernstein’s team currently values the sector at $50 billion, describing it as a “cottage industry.” However, they anticipate it will transform into a regulated asset management industry, managing “$500-650 billion of assets” within five years.
One reason is they believe regulatory challenges will diminish. “The meat of regulatory backlash is done for now, and the Coinbase case will provide further clarity,” said the Bernstein team in a note to investors on Monday. Another reason is the chances of a U.S. spot bitcoin exchange-traded fund (ETF) approval by early 2024 “has significantly increased.”
Chhugani’s team believes the U.S. Securities and Exchange Commission (SEC) will find a middle ground when approving a spot bitcoin ETF rather than “inventing another reason” to deny these funds. Furthermore, the analysts see an “opportunity in stablecoins” when they move from an unregulated environment to a regulated system geared toward “mainstream payments.”
In 2023, over half a dozen companies, including Blackrock, Franklin Templeton and Fidelity, have applied for a spot bitcoin ETF. Coinshares recently introduced a new crypto hedge fund division and expanded its institutional services to the U.S. Meanwhile, Nomura’s Laser Digital, a Japanese financial holding company, launched a bitcoin adoption fund targeting institutional investors. Grayscale Investments recently applied for an ethereum futures ETF with the U.S. securities regulator.
What’s your take on the forecast emerging from Bernstein Research? Share your thoughts and opinions about this subject in the comments section below.
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