Saturday, December 4

Bitcoin market could see trillions in revenue if Bitcoin spot ETFs are approved

Bitcoin is catching up with gold as fast as possible. According to MicroStrategy CEO Michael Saylor, Bitcoin is forecast to replace all gold funds on the exchange in the next two to three years. It will also position itself as the leading asset index for the Western market and will eventually replace the SPDR S&P 500 ETF Trust (SPY). Which is a mutual fund of more than $ 425,000 million that tracks the stock index of the S&P 500.

“To achieve this, you need a spot Bitcoin ETF,” said Saylor, who has invested much of his company’s capital in cryptocurrency. “Once these spot ETFs go to market, I think they will see billions, then tens of billions, then hundreds of billions, and then trillions of dollars flowing into them.” Saylor added.

Likewise, these spot ETFs would hold the underlying Bitcoin and serve as an institutional gateway for investors who want direct exposure. Saylor added.

At the time of writing this article, the price of Bitcoin is located at $ 60,672.51 and has a market capitalization of $ 1,145,422,501,205.  Source: CoinMarketCap
At the time of writing this article, the price of Bitcoin is located at $ 62,000 dollars and has a market capitalization of $ 1,172,965,000,000. Source: CoinMarketCap

Futures ETFs vs Spot ETFs

Two Bitcoin futures ETF funds began trading in October. The first to hit the market was the ProShares Bitcoin Strategy ‘BITO’ ETF. Which accumulated more than $ 1 billion in assets in just days of being launched. While the second, the Valkyrie’s Bitcoin Strategy ETF, had a not so popular reception, but with high expectations. These ETF launches generated a lot of excitement due to Wall Street’s acceptance of cryptocurrencies. And they have helped steer the market into new applications for similar products.

“Bitcoin futures ETFs are inferior offerings, but they are the best institutional investors can get right now,” Saylor said.

“Clearly, the correct answer is to allow investors to spend trillions of dollars in Bitcoin through a spot ETF because spot ETFs plug into the existing security structure, the existing major brokerages, the existing collateral packages.”

Nic Carter, partner at Castle Island Ventures and co-founder of Coin Metrics, agrees that Bitcoin futures ETFs are “inferior.” According to Carter, a Bitcoin spot ETF would be “the most popular commodity ETF launch of all time, attracting probably more than $ 100 billion in assets in less than a month.”

Spot Bitcoin ETFs are already traded in other countries, including Canada. “They work very well,” Carter said. “There is no explanation for the resistance at the upper levels here to approve this spot ETF, which obviously should exist and would make life immensely easier for all kinds of different investors.”

Recently US regulators have denied applications for Bitcoin ETFs

Since the launch of the two Bitcoin futures ETFs, investors have been rushing to apply for other similar products or derivatives. Some analysts anticipate that many more such applications would flood the financial system in the coming months. Although recently, regulatory institutions have doubted some of them.

Direxion, a financial provider renowned for its leveraged ETFs, withdrew its application for the launch of the Direxion Bitcoin Strategy Bear ETF on Tuesday. The firm had filed an application on October 26, and staff from the United States Securities and Exchange Commission requested that it be withdrawn the same day. Similarly, Valkyrie has also dropped its application for the “Valkyrie XBTO Levered BTC Futures” ETF, which would deliver 1.25 times the reference price of Bitcoin.

However, US market regulators have yet to give the green light to cryptocurrency spot ETFs. Criticism of investor safety around Bitcoin spot ETFs “sounds completely empty,” Carter said. “Ultimately, the reason for these criticisms is simply to suppress the growth of Bitcoin.”

In such a way, Hester Peirce, a member of the Securities and Exchange Commission of the United States, said that the US regulator made public about why it rejected a spot ETF. “The main reason is that the Bitcoin markets do not look like our regulated securities markets.”

As for the factors that would drive Bitcoin much higher. Caitlin Long, founder and director of Avanti Bank & Trust, stated that “cryptocurrency does not need a catalyst, as long as the Bitcoin Blockchain keeps adding blocks, Bitcoin will be fine.”

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