Impending Spot Bitcoin ETF Approval: A Game-Changer or Potential Pitfall?

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The much-awaited approval of a spot Bitcoin exchange-traded fund (ETF) in the United States was pushed to January by the SEC.
  • Analysts foresee an institutional demand surge for Bitcoin, potentially causing scarcity of Bitcoin supply if the ETF gains approval.
  • Industry insiders, including Valkyrie CEO Leah Wald, caution against acquiring the entire decentralized Bitcoin supply.
  • Debate arises over whether a U.S. Bitcoin ETF approval will significantly impact markets, raising uncertainties.

Fox Business correspondent Charles Gasprino has commented on the @SECGov’s decision regarding the $BTC “spot” ETF, stating that it is expected to be released “hopefully next week.” As the crypto community awaits the SEC decision on the spot Bitcoin ETF, scheduled within the next week, uncertainty about its potential ramifications remains.

The much-awaited approval of a spot Bitcoin exchange-traded fund (ETF) in the United States was pushed to January by the SEC. Analysts project that the approval could prompt a surge in demand from institutional investors, potentially causing a substantial reduction in available Bitcoin supply.

However, industry insiders caution that securing a vast amount of Bitcoin may prove challenging. Valkyrie CEO Leah Wald commented that acquiring the entire circulating supply is not practical, pointing out that Bitcoin’s decentralized nature and the reluctance of many holders to sell at any price act as natural barriers against monopolization.

Bitwise’s Chief Investment Officer, Matt Hougan, echoed this sentiment, citing the scarcity principle, which means that the asset’s price will rise to meet the demand. While acknowledging the potential to corner a significant portion of Bitcoin, he highlighted the inherent difficulty in monopolizing the entire supply.

Despite the competitive landscape among potential spot Bitcoin ETFs, there is skepticism about the SEC’s intent to corner the entire Bitcoin market. David Gerard, author and crypto blogger, views ETFs as tools for leveraging Bitcoin as a dollar derivative rather than expressing genuine interest in cryptocurrencies.

Concerns are also raised by figures like BitMEX co-founder Arthur Hayes, who fears that successful ETFs could “destroy” Bitcoin. ARK Invest CEO Cathie Wood suggests investors might “sell on the news” of spot Bitcoin ETF approval, potentially affecting short-term market dynamics.

The community recalls older estimates from crypto entrepreneur Lark Davis anticipating an influx of up to $30 billion into Bitcoin, with spot Bitcoin ETF issuers expected to acquire approximately 50% of the total Bitcoin available on exchanges to secure their ETFs.

However, some argue that the impact of a spot Bitcoin ETF approval in the U.S. may not be as profound as anticipated. Comparisons to existing spot Bitcoin ETFs trading in countries like Canada are drawn, although analysts caution that the sheer size of U.S. capital markets could lead to unprecedented consequences.

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