Reggie Browne, known as the “ETF Godfather”, has expressed his views on Bitcoin spot ETF, stating that there is a high probability that Bitcoin spot ETF will trade at a premium to the spot price due to the complexity of market-making operations.
With the launch of Bitcoin spot ETF seemingly imminent, the price of Bitcoin surged yesterday evening and reached a new high of $47,248 today, the highest in 21 months. Reggie Browne, known as the “ETF Godfather”, shared his thoughts on Bitcoin spot ETF in an interview with Bloomberg.
The spot ETF price will have an 8% premium. Reggie Browne, currently the Head of ETF Trading and Sales at Global Trading Systems (GTS), stated that if the spot Bitcoin ETF is approved, there is a high probability that the initial price will trade at a premium to the spot price.
The emergence of this premium is partly due to the current way US institutions trade cryptocurrencies. Since most US brokers cannot directly trade Bitcoin with cash in their brokerage business, they will have to hedge through futures trading and trade Bitcoin at a premium, and then choose to close their positions, which adds to the complexity of operations.
From a market-maker’s perspective, Reggie Browne believes that despite some trading complexities, the market’s liquidity is strong enough to maintain the spread within a highly competitive and tight range.
He further emphasized that market-makers are ready to provide ample liquidity for this new trading structure and build resilience around it, which alleviates investors’ concerns about spreads.
How does Bloomberg’s ETF analyst view this? Reggie Browne’s viewpoint has attracted the attention of many analysts, including Bloomberg’s ETF analyst James Seyffart. James agrees that brokers not being able to access Bitcoin and having to hedge through futures can be troublesome, but he thinks that an 8% premium seems too high and time will prove everything.
It is understood that Reggie Browne plays a core role as the godfather in the ETF industry. Since the launch of the SPDR S&P 500 ETF Trust (SPY) in 1996, he has been providing liquidity for both new and old ETFs. Prior to joining GTS, Browne held senior leadership positions at Cantor Fitzgerald, Newedge USA, Susquehanna International Group, and O’Connor Associates.
His achievements in the ETF field include serving as a designated market maker for numerous pioneering ETFs and developing multiple international ETF markets. In 2019, he even received the Lifetime Achievement Award from ETF.com.
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