Many investors favor owning whole units of an asset, a bias that poses barriers to Bitcoin adoption. Bitcoin exchange-traded funds (ETFs) could offer a solution by allowing fractional ownership, according to Gurbacs, the director of digital asset strategy at VanEck.
Gurbacs said that many people are unaware that they could own a fraction of a Bitcoin, and even more people do not want to own a fraction of a coin. He stated:
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.
Bitcoin is currently preventing some potential investors who don’t want to purchase a fraction of a coin. VanEck adviser Gabor Gurbacs suggests this reluctance stems from unit bias psychology. In several posts, Gurbacs said people often prefer owning complete assets and that “owning a full share feels better than owning 0.001 Bitcoin.”
While recognizing this bias is no recent observation, Gurbacs argues understanding such psychological market dynamics is critical. “Simplistic but unit bias psychology matters a lot. I think about this a lot,” he wrote.
ETFs Can Democratize Bitcoin Investment
Gurbacs contends Bitcoin ETFs would mitigate unit bias by allowing investors to own a share of the fund’s underlying BTC. With the crypto industry expecting an imminent SEC decision on several ETF applications, the product could soon offer exposure to Bitcoin without directly handling the cryptocurrency.
Recent surveys indicate continued hesitancy around Bitcoin ETFs among financial advisors, with only 39% expecting approval in 2024. However, asset managers appear confident as deadlines approach for final documentation. The filings will disclose remaining ETF specifics like fees and tickers.
For example, BlackRock has not yet publicized the costs for its proposed fund. While uncertainty lingers, the infrastructure for SEC-approved Bitcoin ETFs is nearing completion.
If licensed as anticipated, these new investment vehicles may provide the access points needed to overcome barriers like unit bias. Opening fractional ownership could mark a critical step in Bitcoin’s path toward mainstream adoption. Time will tell whether retail appetite matches fund issuers’ enthusiastic aspirations.
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