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Mike Novogratz, CEO of Galaxy Digital, foresees Bitcoin adoption being driven by ETFs.

Galaxy Digital CEO Mike Novogratz recently discussed the future of Bitcoin and the potential impact of Exchange-Traded Funds (ETFs) on the digital asset market.

In an insightful interview with Forbes, Novogratz emphasized the crucial role traditional finance plays in the growth of Bitcoin. Following the U.S. Securities and Exchange Commission’s approval of the first U.S.-listed spot bitcoin ETFs, he believes this marks the start of a new era for institutional and retail engagement in the cryptocurrency sector.

ETFs are poised to attract a wider range of investors to Bitcoin and other cryptocurrencies by providing easier access and a familiar investment vehicle for traditional players. This development is expected to address liquidity and volatility issues that have deterred conservative investors from entering the crypto market.

Despite the positive outlook on ETFs, Novogratz raised concerns about ongoing regulatory uncertainties that could impede the industry’s growth. He criticized the SEC’s regulatory approach and called for a more supportive legislative framework to foster innovation and ensure stability in the crypto space.

Novogratz remains bullish on Bitcoin’s potential as a store of value, often likening it to gold. In a CNBC discussion, he acknowledged potential price corrections for Bitcoin but maintained a positive long-term outlook, citing the influx of institutional money, particularly through ETFs, as a key driver for Bitcoin’s price in 2024.

In the evolving landscape of cryptocurrency investments, the transition of Grayscale’s GBTC to a spot Bitcoin ETF led to an $8 billion outflow of funds last week. Although significant, the pace of outflows has slowed, suggesting a potential end to the downward trend. January saw the bulk of outflows at $5.64 billion, with February only totaling $1.37 billion.

Novogratz commented on Grayscale’s situation, noting the product’s scrutiny and criticism for high fees and structural flaws, which led to investor losses. As arbitrage opportunities diminished, investors turned to alternative ETFs offering lower fees and better transparency from industry giants like Invesco, BlackRock, and Fidelity.

Simultaneously, the cryptocurrency investment realm saw the introduction of nine leading spot Bitcoin ETFs that garnered over 200,000 BTC (approximately $9.5 billion) since their launch on Jan. 11. These new ETFs have emerged as popular commodity exchange-traded funds in the U.S., even surpassing silver ETFs.

The nine Bitcoin ETFs include BlackRock (IBIT), Fidelity (FBTC), Bitwise (BITB), Ark 21Shares (ARKB), Invesco (BTCO), VanEck (HODL), Valkyrie (BRRR), Franklin Templeton (EZBC), and WisdomTree (BTCW).

Among them, the BlackRock iShares Bitcoin Trust (IBIT) with $6.6 billion in assets and Fidelity’s Wise Origin Bitcoin Fund (FBTC) with $4.8 billion in assets have attracted significant investor interest.

This shift towards Bitcoin ETFs highlights investors’ inclination towards regulated financial instruments to access Bitcoin, signifying a wider acceptance of cryptocurrencies within the investment community.

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