European digital asset investment firm, CoinShares, has successfully completed the acquisition of Valkyrie Funds, which includes the rights to the firm’s spot Bitcoin exchange-traded funds (ETFs). CoinShares has also acquired Valkyrie Investments, the firm’s investment advisory business, and the sponsor rights for its physically-backed Bitcoin ETF called the Valkyrie Bitcoin Fund. The acquisition price will be determined based on Valkyrie’s financial performance over a three-year earnout period. CoinShares will also take over the management of Valkyrie’s other ETFs, including the Valkyrie Bitcoin and Ether Strategy ETF, the Valkyrie Bitcoin Miners ETF, and the Valkyrie Bitcoin Futures Leveraged Strategy ETF.
CoinShares CEO, Jean-Marie Mognetti, emphasized the importance of the United States market for global asset managers. He stated that the Valkyrie acquisition is a significant step in CoinShares’ growth strategy, particularly in the U.S. market. The acquisition will increase CoinShares’ assets under management (AUM) by an additional $530 million, broadening their product offerings and expanding their innovation capacity. Mognetti believes that this acquisition will significantly increase their total addressable market.
Following the acquisition, CoinShares plans to rebrand Valkyrie and its products under their own ecosystem. CoinShares had the option to acquire Valkyrie since November 2023, and this acquisition aligns with their plans to expand their asset management platform in the United States.
The announcement comes at a time when there is growing interest in Bitcoin ETFs, with Bitcoin reaching a new all-time high of $71,415 on March 11. The Bitwise Bitcoin ETF became the fifth fund to surpass $2 billion in Bitcoin holdings on the same day. However, Grayscale’s Bitcoin Trust ETF remains the largest, managing $29 billion worth of Bitcoin.
If the current growth trend continues, ETFs are projected to absorb 8.98% of the BTC supply annually. This could potentially lead to a “sell-side liquidity crisis” by September, according to Ki Young Ju, the founder and CEO of on-chain analytics platform CryptoQuant. He noted that last week, spot ETFs saw net inflows of +30K BTC, and if this trend continues, there could be a shortage of sell-side liquidity within six months.
In related news, Ethereum’s Dencun upgrade is set to launch in two days, which is expected to have significant implications for the cryptocurrency.