CoinShares, a European firm specializing in digital asset investments, has successfully acquired Valkyrie Funds, a company that offers sponsor rights to spot Bitcoin exchange-traded funds (ETFs). This acquisition also includes Valkyrie Investments, the firm’s investment advisory business, and the sponsor rights for its physically-backed Bitcoin ETF, known as the Valkyrie Bitcoin Fund. CoinShares will settle the acquisition price at the end of a three-year earnout period based on Valkyrie’s financial performance. Additionally, CoinShares will now manage 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.
Jean-Marie Mognetti, the CEO of CoinShares, emphasized the significance of the United States market for global asset managers. He expressed that the Valkyrie acquisition aligns with their growth strategy, providing them with an additional $530 million in assets under management (AUM) and expanding their product offerings. Mognetti highlighted the acquisition’s potential to increase their total addressable market by a factor of 15.
CoinShares plans to rebrand Valkyrie and its products under its own ecosystem following the acquisition. The option to acquire Valkyrie was initially granted to CoinShares in November 2023. This acquisition is part of CoinShares’ broader plans to expand their asset management platform in the United States.
The announcement comes at a time when there is heightened interest in Bitcoin ETFs, particularly after Bitcoin reached a new all-time high of $71,415 on March 11. The Bitwise Bitcoin ETF became the fifth fund to exceed $2 billion in Bitcoin holdings on the same day. However, Grayscale’s Bitcoin Trust ETF remains the largest, managing $29 billion worth of Bitcoin.
According to Dune data, if the recent growth in ETFs continues, they are projected to absorb 8.98% of the BTC supply on an annual basis. This could potentially lead to a “sell-side liquidity crisis” by September if institutional inflows persist, as stated by Ki Young Ju, the founder and CEO of CryptoQuant, an on-chain analytics platform. Ju highlighted the significant netflows of BTC into spot ETFs and expressed concern about a potential liquidity crisis within six months if the current trend continues.
In related news, Ethereum’s Dencun upgrade is set to launch in two days, and its impact is eagerly anticipated in the cryptocurrency community.