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Bitcoin ETFs Emerge as a Solution to Unit Bias Psychology in Cryptocurrency Investment

The price of a single Bitcoin often acts as a deterrent for potential investors who lean towards owning complete units due to a psychological phenomenon known as unit bias, as highlighted by VanEck advisor Gabor Gurbacs.

In a series of posts on X (formerly Twitter), Gurbacs pointed out that many people remain unaware that they can purchase fractions of a Bitcoin, and there is a significant preference for owning whole assets.

Gurbacs expressed his surprise, stating, “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.”

Currently, Bitcoin is trading at approximately $44,000.

One potential solution to address this unit bias psychology, according to Gurbacs, is the introduction of Bitcoin exchange-traded funds (ETFs).

These ETFs typically debut with a double-digit Net Asset Value (NAV), often around $25.

Hypothetically, if Bitcoin ETFs were to launch at around $44 per share, eliminating three zeros, it would significantly reduce the unit bias, making Bitcoin exposure appear more affordable.

READ MORE: Bitcoin Trading Expert Arthur Hayes Predicts Up to 40% Price Crash in March

Gurbacs emphasized that owning a complete share seems more appealing to investors than holding a fraction, stating, “Owning a full share feels better than owning 0.001 Bitcoin.

Se”ems like a small thing but it’s a big thing.” He also acknowledged that while this debate isn’t new, biases play a crucial role in understanding market behavior.

Meanwhile, there is ongoing anticipation within the cryptocurrency industry regarding the United States Securities and Exchange Commission (SEC) potentially approving a spot Bitcoin ETF in the near future.

However, the broader financial services sector remains more skeptical about the likelihood of this happening.

A recent survey conducted by Bitwise, involving responses from 437 financial advisers, revealed that only 39% of U.S. financial advisers anticipate the approval of a Bitcoin ETF in 2024.

As for the progress on a spot Bitcoin ETF debut on Wall Street, final revisions from asset managers are expected by the morning of January 8, with these revisions to be submitted through S-1 filings.

Applicants are also anticipated to disclose remaining fees and tickers, although BlackRock has not yet revealed the associated fees for its ETF.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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