According to analysts, the Bitcoin ETF Spot fund could have a similar impact as Gold ETF Spot funds in the gold market, leading to a significant increase in trading volume. This could simplify institutional access to Bitcoin, thereby opening up new capital inflows into the cryptocurrency market.
Currently, all eyes in the cryptocurrency industry are focused on the race for a Bitcoin ETF Spot, with several positive developments in recent times. This has revitalized the cryptocurrency market, with Bitcoin’s performance surging by 27% in October after a challenging September.
However, some in the crypto community wonder, “What does the approval of a Bitcoin ETF Spot mean for the entire crypto industry? Why is there such high anticipation for it?”
It can be seen that Bitcoin ETF creates FOMO in the community due to its accessibility and the potential effects that come with it.
Expectations of a Gold-like Effect According to cryptocurrency derivatives trader Gordon Grant, after the first Gold ETF Spot fund was approved, the trading volume of gold experienced a significant surge for several years. Therefore, it is highly likely that Bitcoin will repeat the history of gold when a Bitcoin ETF Spot is approved.
Similarly, Alex Thorn, Head of Research at Galaxy Digital, speculates, “An ETF fund could unlock a minimum of $14.4 billion of capital into the market in the first year and could increase to $38.6 billion in the third year. At those levels, BTC/USD could increase by 75% in the year following the approval of the Bitcoin ETF Spot.”
Creating an Entire Value Chain Bitcoin ETF is a group of assets related to the price of BTC that companies purchase, securitize, and trade or list on traditional exchanges rather than crypto exchanges. Unlike Bitcoin ETF Futures, which are based on contract prices in the future, Bitcoin ETF Spot relies on the current Bitcoin price, reflecting the current market capitalization of BTC.
Bitcoin ETF Spot excites the crypto community because it is seen as a channel for unlocking capital from the traditional financial market into the cryptocurrency space, allowing investors to pour money into this asset without actually owning it.
Moreover, Bitcoin ETF Spot has the potential to catalyze various financial activities. Taking the Gold ETF model as an example, when Gold ETF Spot appeared and began operating, gold was traded not only at the basic asset level but also on various derivatives markets. This creates an entire value chain.
Facilitating Easier Access to Bitcoin The introduction of Bitcoin ETF Spot will simplify institutional investors’ access to Bitcoin. Investors won’t have to worry about holding private keys or safeguarding seed phrases, as organizations typically would need to develop internal solutions to custody their own cryptocurrencies.
Additionally, Bitcoin ETF Spot could impact the distribution channels of institutional capital, making it easier for 401(k) retirement planners or investment managers to incorporate Bitcoin into their portfolios.
It’s worth noting that Bitcoin ETF Spot typically has lower fees compared to Bitcoin ETF Futures. The Bitcoin futures market tends to be in a contango state (future prices are higher than current prices), causing ETF Future funds to perform less optimally compared to Bitcoin.
Despite the positive signals and forecasts for the market, the U.S. Securities and Exchange Commission (SEC) continues to delay its decision on several proposals for Bitcoin ETF Spot funds due to concerns about market manipulation, liquidity, and the inherent volatility of this asset.