For large players seeking exposure to Bitcoin, the Spot Bitcoin ETF will provide cheaper costs and better convenience leading towards a biased ecosystem.
The U.S. crypto market eagerly anticipates the approval of the first spot Bitcoin ETF from the U.S. SEC, with analysts projecting its arrival in early 2024. This development, however, raises questions about its impact on existing Bitcoin futures ETFs.
Currently, the primary route for U.S. fund investors to engage with cryptocurrency is through products based on Bitcoin futures contracts. Despite making a significant debut in October 2021, their market value has stabilized around $1 billion.
Analysts argue that spot-based funds, accurately tracking Bitcoin's price and potentially at a lower cost, could disrupt these existing futures ETFs.
James Seyffart, an analyst at Bloomberg Intelligence, highlights the advantages of spot products for a wide range of investors, particularly those interested in long-term holdings.
The introduction of spot Bitcoin ETFs could reshape the landscape, potentially leading to a shift in trading activity and liquidity away from U.S. Bitcoin futures markets.
Analysts from Bloomberg Intelligence foresee the arrival of spot Bitcoin ETFs catapulting the market to $100 billion. This surge could challenge the futures ETF products for Bitcoin, which have struggled to keep pace with the cryptocurrency's rally this year.
The anticipated outflows from Bitcoin futures ETFs, attributed to their higher costs and underperformance, further emphasize the potential impact of spot-based ETFs.
K33 Research's report paints an even more optimistic picture, suggesting that the approval of a spot Bitcoin ETF could trigger a 66% bull rally. This could potentially drive Bitcoin's price toward $42,000 within the first 100 days of its sanction.
Vetle Lunde, a seasoned analyst at K33 Research, made the prediction based on his research. The report emphasizes the underestimated influence of a U.S. spot Bitcoin ETF approval on the crypto market, drawing on historical data linking substantial inflows to heightened upward momentum.
Source: K33 Research
Lunde commented on this, saying:
“The market is wrong – and dramatically underestimates the impact of US BTC ETFs (and ETH futures-based ETFs)… Odds for US spot ETF approval have never been better… I expect stronger inflows than both BITO and Purpose managed in their first trading days… The past four years have seen a strong relationship between strong BTC investment vehicle inflows and appreciating BTC prices.”
Amid these bullish and bearish controversies, Bitcoin is currently trading at $25,708.83, down -0.47% in the previous 24 hours, with a live market size of $501 billion, As per CoinStats. It has a circulating supply volume of 21,000,000 BTC coins and a maximum supply volume of 21,000,000, with a 24h trading volume of $12 billion.
The imminent arrival of a spot Bitcoin ETF signifies a pivotal moment in the evolution of the crypto market. Its potential to challenge existing futures-based ETFs and propel the market value to $100 billion underscores its significance. The bullish outlook from K33 Research further fuels the anticipation surrounding this development.
However, it's essential to note that while the potential impact is substantial, external events could still sway the trajectory of Bitcoin and the broader crypto market.