Asset management firm Morgan Creek Digital just raised $40 million for its Morgan Creek Blockchain Opportunities Fund, and two US pensions joined in the fundraising. Bloomberg reported that two of the three benefit plans from the Fairfax County Retirement Systems were investors in the new fund.
Blockchain has become a popular place to invest. Unlike cryptos, which have struggled to gain widespread support from institutional investors, blockchain has been doing great. The original cap for the Morgan Creek Blockchain Opportunities Fund was $25 million, but it was expanded to accommodate the level of investor interest.
Bloomberg quoted an investment officer at Fairfax pension funds as saying,
“It will take time for pension funds to get comfortable with investing in Bitcoin. We need to educate multiple stakeholders and demystify this nascent industry.”
There has been talk of launching a Bitcoin ETF for years, but to date, nothing has come to fruition. Despite the fact that there are many ETFs that can be very risky to invest in, the Bitcoin ETF seems to be a bridge too far.
Morgan Creek Digital Sees Potential in Bitcoin
Anthony Pompliano, the CEO of Morgan Creed Digital, told BlockTV that the approval of a Bitcoin ETF could be a potentially dangerous thing for the crypto market back in January. He thinks that if BTC doesn’t fly higher after a BTC ETF is launched, it could be terrible for the market in the long-run.
The reason why is simple; there has been so much BTC ETF hype, anything but a major rally would lead to massive psychological damage. Another factor that could derail the bitcoin bull thesis is the potentially long wait for a BTC ETF to go live.
Bitwise Asset Management CEO Hunter Horsley recently sat down on CNBC for an interview. He talked about how many solid fundamental factors were lining up behind cryptos last year, despite the terrible price action. Horsley cited the rise of Bitcoin futures on major exchanges, and Fidelity’s decision to enter the crypto space.
Read: What is an ETF?
Horsley went on to comment on the length of time associated with launching an ETF, “Leverage ETFs took five years. Actively-managed ETFs took six or seven years. Even gold, which has been around for thousands of years and had a product in Australia, took three years from S-1 to initial launch. And I think that the fact that the SEC has taken a couple of years to get comfortable with (cryptocurrencies) makes complete sense. It’s not that they are anti-crypto, but they’re pro-investor.”
Would an ETF Drive BTC Prices?
There is no real way to know if the launch of a BTC ETF would have the kind of effect that Bitcoin bulls are hoping for. On the plus side, it would provide an easy way for both individuals and institutions to buy Bitcoin from their existing brokerage accounts.
On the other hand, there may not be as much demand for Bitcoin from regular investors as many think. There is no shortage of ways to buy BTC, and there are also crypto buying options for wealthy investors and larger institutions. There is little doubt that a BTC ETF would drive incremental demand for BTC, but it may not be enough to smash the market higher.
Grayscale has been offering Ethereum trusts since late 2017, and they haven’t produced a significant amount of buying in either ETH or ETC. It is true that Grayscale is a Canadian company, so it isn’t exactly a fair comparison to a BTC ETF which would trade on a major US exchange.
Nonetheless, it does show that crypto investment products that bridge the gap between traditional investment and the crypto world don’t necessarily mean that the former will pour money into the latter.