A Galaxy Research report released Wednesday found that Bitcoin ETFs are competing with listed cryptocurrency miners in the long run. Galaxy analysts note that prior to the approval of these ETFs, investors were able to gain exposure to Bitcoin ‘s rising price through public mining stocks. With the emergence of more sophisticated investors, miners now need to show how well they can earn to compete with another type of investment.
Analysts, including Brandon Bailey, vice president of Galaxy Mining, stated: “In the short term, ETF approval is likely to be a factor that investors consider when evaluating whether to invest in public stocks of mining companies.”
Meanwhile, from a short-term perspective, it appears that institutions prefer bitcoin ETFs to mining company stocks, a trend that has begun to intensify since early 2024.
Bitcoin ETFs give investors a controlled opportunity to tap the potential of Bitcoin without owning the cryptocurrency directly. As this type of investing becomes more popular, it could affect the demand for Bitcoin itself.
The Galaxy report indicates that cryptocurrency miners could be affected by this shift in demand. Factors such as mining profitability, Bitcoin’s value and market sentiment may be particularly affected.
The Galaxy team also noted that if mining companies decide to raise funds by issuing more shares, share prices could fall sharply. This happens when investors believe they can get a better return by investing in ETFs instead of investing directly in the company.
