Breaking Down Unit Bias: Bitcoin ETFs Could Make Cryptocurrency More Accessible, Says VanEck Advisor
Summary:
Bitcoin's high price is deterring potential investors due to unit bias psychology, which favors owning whole units, according to VanEck advisor Gabor Gurbacs. To counter this, he proposes Bitcoin exchange-traded funds (ETFs) as they make Bitcoin appear more affordable. While the crypto industry anticipates the approval of a spot Bitcoin ETF by the SEC, a survey reveals just 39% of U.S. financial advisors expect Bitcoin ETF approval this year. The process is reportedly nearing completion, with final amendments from asset managers awaited.
Gabor Gurbacs, an advisor with VanEck, suggests that unit bias psychology may be deterring potential investors from buying into Bitcoin (BTC) due to their preference for owning complete units, as opposed to fractions. This bias suggests that individuals are more attracted to owning full assets, rather than a segment of an asset. In response to this, Gurbacs posits that Bitcoin exchange-traded funds (ETF) may provide a solution to this problem.
In a compilation of posts on the platform X, formerly known as Twitter, Gurbacs voices his astonishment that many individuals are oblivious to the fact that you can own portions of a Bitcoin. He further asserts that there are even higher numbers of individuals who prefer to own full assets altogether. He comments, "I was surprised that a good number of people didn't know that one can own a fraction of a Bitcoin and even more frequently people didn't want to own a fraction of a coin."
In his posts, Gurbacs mentions that Bitcoin trades at roughly $44,000 today. Most ETFs typically launch with a net asset value (NAV) in the double digits, often $25. Hypothetically, if a Bitcoin ETF were to launch at $44 per share, which is equivalent to eliminating 3 zeros, owning Bitcoin would seem more affordable and could help to eliminate much of the unit bias.
Though Gurbacs acknowledges that this conversation is not a novel one, he maintains that biases are crucial tools to understanding how markets operate.
The crypto industry is currently brimming with anticipation over the possibility of the United States Securities and Exchange Commission approving a spot Bitcoin ETF in the coming week. However, the wider financial services industry maintains a more skeptical outlook. A recent survey conducted by Bitwise, based on responses from 437 financial advisors, showed that just 39% predict a Bitcoin ETF approval this year.
Cointelegraph recently reported that the journey to launching a spot Bitcoin ETF on Wall Street is nearing its final stages, with last-minute amendments from asset managers expected by the morning of January 8. These amendments are to be submitted through S-1 filings before business starts, and applicants should disclose any remaining fees and tickers. Notably, BlackRock has yet to reveal the fees linked with its ETF.
Published At
1/7/2024 8:35:36 AM
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