The approval of the first spot Bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) is eagerly awaited in the U.S. crypto market. Analysts predict that the spot Bitcoin ETF could be approved by early 2024, marking a significant development in the industry.
Currently, the most accessible way for U.S. fund investors to engage with cryptocurrency is through Bitcoin futures ETFs. These products, introduced in October 2021, initially gained attention and set records. However, their market value has since stabilized at around $1 billion, and they have struggled to maintain their initial excitement.
Analysts argue that spot-based funds, which would more accurately track the price of Bitcoin, could pose a threat to the existing Bitcoin futures ETFs. They believe that spot ETFs would attract new investors, particularly those looking to buy and hold over longer periods, as they are likely to be cheaper and more efficient than futures-based ETFs.
According to Bloomberg Intelligence analysts, the introduction of spot Bitcoin ETFs could potentially create a $100 billion market and dampen the demand for futures ETFs. The underperformance and higher costs of futures-based ETFs could lead to significant outflows once spot ETFs become available.
Spot ETFs offer real-time reflection of supply and demand, which could result in a shift in trading activity and liquidity away from U.S. Bitcoin futures markets. Additionally, spot funds may offer lower fees compared to existing futures-based ETFs, adding to their appeal.
If Bitcoin ETFs are launched, intense competition among various issuers is expected in the increasingly competitive ETF landscape. As the market evolves, fee battles have become common, both in emerging categories and established asset classes.
Overall, the arrival of spot Bitcoin ETFs is eagerly anticipated, as they are seen as superior products that could attract new investors, potentially leading to a significant shift in the market dynamics and competition among ETF issuers.