Bitcoin Spot ETF: A New Turning Point in the Crypto Market

After a long bear market, the crypto market is in urgent need of new breakthrough points to boost overall sentiment. Similar to the buzz created in 2020 when a Bitcoin trust fund received regulatory approval, the most likely candidate to play this role now is the highly anticipated Bitcoin Spot ETF.

Despite the cautious attitude of U.S. regulators towards the Bitcoin Spot ETF and the repeated delays in approvals, the market remains optimistic about its eventual approval. According to current predictions, the probability of the Bitcoin Spot ETF being approved this year is 75%, with a likelihood of up to 95% by the end of 2024. The approval of the Bitcoin Spot ETF is expected to be a significant factor in ending the bear market and driving the next bull market.

Introduction to Bitcoin Spot ETF and Its Advantages

A Bitcoin Spot ETF is a fund that allows investors to buy and sell actual Bitcoin at the current market price. The fund directly purchases, sells, and holds Bitcoin, enabling investors to participate in the market without the need to manage their own Bitcoin wallets.

Compared to Bitcoin futures ETFs, spot ETFs carry lower risks because investors hold actual Bitcoin during the contract period. As an exchange-traded fund, Bitcoin spot ETFs can be traded on stock exchanges, providing investors with flexible investment and trading strategies.

In addition, the Bitcoin Spot ETF provides traditional financial institutions with a compliant investment tool, allowing them to participate in the Bitcoin market within a proper regulatory framework. This further promotes the development of the Bitcoin market and brings encryption currencies into the view of traditional finance.

Reasons for Capital's Preference for Bitcoin Spot ETF

1. Expand market size and participation: As a major exchange product, ETFs have a total value of $7 trillion. The launch of the Bitcoin Spot ETF will attract more investors and expand the overall market size.

2. Provide opportunities for direct participation in the Bitcoin market: Compared to futures, Spot ETFs are closer to the real Bitcoin market, allowing capital to manage and allocate assets more flexibly.

3. Meet market demand and expand investment channels: Provide traditional financial institutions with convenient access to the crypto market.

4. Provide higher transparency and regulatory compliance: Bitcoin Spot ETFs listed on exchanges are directly subject to regulatory scrutiny, creating a safer and more reliable investment environment for capital.

Bitcoin Spot ETF Application Status

Since 2013, institutions in the United States have applied for Bitcoin Spot ETFs every year, but have been rejected. Until June of this year, when the world's largest asset management company submitted an application, reigniting the market's hopes for the approval of Bitcoin Spot ETFs.

As of August, 8 well-known institutions have applied for Bitcoin Spot ETFs. The density of these applications is clearly not without basis, and the "curse" of the inability to approve Bitcoin Spot ETFs in the United States may be broken in this wave of applications.

The Potential Impact of Bitcoin Spot ETF on the Crypto Market

1. A large crypto exchange may become the biggest beneficiary: Several applicant institutions have chosen the exchange as their custody partner and may gain a significant amount of asset custody business in the future.

2. It may become the "engine" for the crypto market to shift from bear to bull: providing a secure and effective channel for a large amount of capital from traditional finance to enter the crypto world, which is expected to stimulate the market to initiate a new round of bull market.

3. Accelerate the mainstreaming process of encryption assets: Provide institutional investors with more convenient and standardized participation pathways, and increase the awareness and popularity of cryptocurrencies. At the same time, the oversight shared protocols will enhance market transparency, improve credibility, and boost investor confidence.

Summary

Although U.S. regulatory agencies have not made a final decision, logically, since high-risk Bitcoin futures ETFs have been allowed to be listed, there is no reason to deny spot ETFs. New applications have joined the oversight sharing agreement, addressing the previous lack of regulatory transparency. Reports suggest that a certain exchange is preparing a regulatory cooperation agreement, and regulators may be waiting for traditional financial institutions to complete infrastructure development. Therefore, the listing of Bitcoin spot ETFs in the U.S. seems to be just a matter of time.