Bitcoin Spot ETF: A Potential Turning Point for the Crypto Market

After experiencing a prolonged bear market, the market's thirst for positive news has become increasingly strong. The mere emergence of innovative projects is no longer sufficient to boost overall market sentiment. The market urgently needs new breakout points, and the most likely candidate to play this role is the highly anticipated Bitcoin Spot ETF.

Despite regulatory agencies maintaining a cautious attitude towards Bitcoin Spot ETF and once again delaying approval, the market remains optimistic about its eventual approval. According to current market predictions, the probability of Bitcoin Spot ETF being approved within this year is 75%, and the probability of approval by the end of 2024 could reach 95%. The long-term bear market has stifled market vitality, and the approval of Bitcoin Spot ETF is expected to be a significant boost and may serve as a catalyst for the next round of crypto bull market.

The Nature and Appeal of Bitcoin Spot ETF

To understand Bitcoin Spot ETF, it is first necessary to understand the concepts of ETF and Bitcoin Futures ETF. ETF( Exchange-Traded Fund) is an investment tool designed to track the price and performance of a specific asset. They can be traded on stock exchanges, and investors can buy and sell ETFs like trading stocks.

Bitcoin futures ETF is a fund that holds futures contracts linked to the price of Bitcoin, rather than directly holding Bitcoin. They track the price movements of Bitcoin by holding futures contracts.

In contrast, Bitcoin Spot ETF allows investors to buy and sell real Bitcoin at current market prices. The fund will directly purchase, sell, and hold actual Bitcoin. This enables investors to participate in the Bitcoin market without having to manage their own Bitcoin wallets.

The advantages of Bitcoin Spot ETF include:

1. No need to invest in Bitcoin directly through the exchange.
2. Lower transaction fees and simplified processes
3. Lower risk than futures ETF
4. Invest at the actual Bitcoin price
5. Considered a more legitimate investment method
6. Provide flexible investment and trading strategies
7. Provide compliant investment tools for traditional financial institutions

Reasons why capital favors Bitcoin Spot ETF:

1. Expand market size and participation: The total value of the ETF market has reached $7 trillion, and the launch of Bitcoin Spot ETF will further expand participation in the encryption currency industry.

2. Provide direct access to the Bitcoin market: Spot ETF is closer to the real Bitcoin market, allowing capital to manage and allocate Bitcoin assets more flexibly.

3. Meet market demand and expand investment channels: Provides traditional financial institutions and large capital with access to the crypto market.

4. Providing higher transparency and regulatory compliance: Being listed on the exchange, subject to direct review and supervision by regulatory authorities, provides a safer and more reliable investment environment for capital.

Bitcoin Spot ETF Breakthrough

For many years, Bitcoin Spot ETF has not been approved in the United States. However, outside the United States, Canada successfully launched the world's first Bitcoin Spot ETF in February 2021.

As the center of the global crypto market, the United States has investment institutions continuously trying to apply for a Bitcoin Spot ETF. In June of this year, the world's largest asset management company submitted an application for a Bitcoin Spot ETF, reigniting the market's hopes for the approval of a Bitcoin Spot ETF.

The company manages assets exceeding $9 trillion and proposed a cryptocurrency trading platform as the custodian and spot market data provider in its application documents, with Bank of New York Mellon as the cash custodian. It is worth mentioning that the company has had only 1 rejection out of its last 576 ETF applications.

Due to the market's optimistic attitude towards this application, some institutions that previously failed to apply have rejoined the ranks of applicants. As of August, eight well-known institutions have applied for Bitcoin Spot ETF. This wave of intensive applications may indicate that the situation of the U.S. Bitcoin Spot ETF being unable to be approved is about to be broken.

The Potential Impact of Bitcoin Spot ETF on the Crypto Market

1. A certain encryption trading platform may become the biggest winner

After the ETF application is approved, the biggest beneficiaries may be the crypto trading platforms acting as custodians. Many institutions applying for the ETF have chosen this platform as a partner to provide regulatory sharing services. In the future, with the development of Bitcoin spot ETFs, the market share of this platform is expected to further expand.

2. Possible triggers for a bull market in the crypto market

The approval of the Bitcoin Spot ETF will provide a safe and effective channel for a large amount of traditional financial funds to enter the encryption world. The current market is in need of significant positive news to stimulate the transition from bear to bull, starting a new round of bull market. As more asset management companies flood in, the scale of traditional funds entering the crypto market will be quite considerable.

3. Accelerate the mainstreaming of encryption assets

The launch of the Bitcoin Spot ETF provides institutional investors with a more convenient and standardized way to participate, helping to increase the awareness and popularity of encryption currency. In addition, the supervision sharing protocol will enhance market regulatory transparency, improving credibility and investor confidence. These factors will drive the crypto market towards greater maturity and stability.

Conclusion

Despite the many reasons supporting the approval of Bitcoin Spot ETF, the outcome remains unpredictable until the regulatory authorities make a final decision. However, logically speaking, since high-risk Bitcoin Futures ETFs have already been allowed to be listed, there is no reason to reject the Spot ETF. The previous reason for rejection due to a lack of regulatory transparency is no longer valid, as new applications have all joined the supervision sharing agreement.

There are reports that Nasdaq is preparing a regulatory cooperation agreement with a U.S. Bitcoin trading platform. Regulators may be waiting for traditional financial institutions to complete their infrastructure build-out. Therefore, it seems that the listing of a Bitcoin Spot ETF in the U.S. is just a matter of time. This breakthrough will have a profound impact on the crypto market and could become an important catalyst for the market's transition from bear to bull.