CoinShares Acquires Valkyrie’s ETF Business

European digital asset investment firm CoinShares has completed the acquisition of Valkyrie Funds LLC, obtaining the sponsor rights to the firm’s spot Bitcoin exchange-traded funds (ETFs). CoinShares also acquired Valkyrie Investments Inc. and the sponsor rights for its physically-backed Bitcoin ETF, the Valkyrie Bitcoin Fund ($BRRR). The acquisition price will be determined based on Valkyrie’s financial results over a three-year earnout period. CoinShares will also now manage Valkyrie’s other ETFs, such as the Valkyrie Bitcoin and Ether Strategy ETF ($BTF), Valkyrie Bitcoin Miners ETF ($WGMI), and Valkyrie Bitcoin Futures Leveraged Strategy ETF ($BTFX). CoinShares CEO Jean-Marie Mognetti believes the US market is crucial for asset managers and sees the Valkyrie acquisition as a significant step in their growth strategy, expanding their product offerings and increasing their total addressable market.

CoinShares will rebrand Valkyrie and its products under its own ecosystem following the acquisition. CoinShares had the option to acquire Valkyrie since November 2023 as part of its plans to expand its asset management platform in the US. The announcement comes at a time of heightened interest in Bitcoin ETFs, following Bitcoin’s new all-time high of $71,415 on March 11. The Bitwise Bitcoin ETF ($BITB) recently became the fifth ETF to surpass $2 billion in Bitcoin holdings. Grayscale’s Bitcoin Trust ETF ($GBTC) remains the largest, managing $29 billion worth of Bitcoin.

If the recent growth in ETFs continues, it is projected that they will absorb 8.98% of the Bitcoin supply annually. This could potentially lead to a sell-side liquidity crisis by September if institutional inflows persist, warns Ki Young Ju, the founder and CEO of CryptoQuant. Ju highlights that netflows of +30K BTC were observed in spot ETFs last week, and with exchanges and miners already holding around 3 million BTC, including 1.5 million held by US entities, the rate at which BTC is being accumulated could deplete the supply within six months.

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