What does the approval of a Bitcoin ETF spot mean for the entire crypto industry?

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Analysts said that Bitcoin ETF spot could have a similar impact on the gold market as gold ETF spot, causing trading volume to increase by “several orders of magnitude.” At the same time, it simplifies the process for organizations to acquire Bitcoin, thereby opening up new avenues for capital to flow into the cryptocurrency market.

At present, the cryptocurrency industry’s attention is focused on the Bitcoin ETF spot competition, and there has been a lot of good news recently. This has sparked excitement in the cryptocurrency market, and Bitcoin’s performance has also risen strongly in October, reaching 27% after a “bloody” September.

However, some members of the community have raised questions “What does the approval of the Bitcoin ETF Spot mean for the entire crypto industry? Why are there such high expectations for it?”

It can be seen that the Bitcoin ETF has created FOMO in the community due to its accessibility and the potential impact that comes with it.

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Expected to have similar effects to gold

Cryptocurrency derivatives trader Gordon Grant said gold trading volumes soared in the following years after the first spot gold ETF was approved. Therefore, when the Bitcoin ETF spot is approved, Bitcoin is likely to repeat the history of gold.

Likewise, Alex Thorn, head of research at Galaxy Digital, speculated: “The ETF could unlock at least $14.4 billion in capital inflows into the market in the first year, increasing to $38.6 billion in the third year. At these levels, BTC/USD could rise by 75% within a year of the Bitcoin ETF spot approval .”

Create a full value chain

Bitcoin ETFs are a group of assets tied to the price of BTC that are purchased, securitized and sold by companies, or traded on traditional exchanges rather than cryptocurrency exchanges.

Unlike Bitcoin ETF futures contracts, which are based on the future price of BTC, Bitcoin ETF spot will be based on the current Bitcoin price, thus reflecting the current market value of BTC.

Compare Bitcoin Spot ETFs and Bitcoin Futures ETFs

The Bitcoin ETF spot is popular among the FOMO and bullish communities because it is a gateway that opens up the flow of capital from financial markets into the cryptocurrency space, helping investors put money into these assets without actually owning them.

Additionally, Bitcoin ETF spot could become a catalyst for multi-layered financial activity. Take the gold ETF model as an example. When spot gold ETFs appear and officially operate, gold will not only be traded at the underlying asset level, but will also be traded across the derivatives market.

Ultimately, trading layers including options, futures and pure volatility trading can be connected to each other, creating a value chain.

Making accessing Bitcoin easier

The launch of Bitcoin ETF spot will simplify the process of acquiring Bitcoin for institutional investors. Because investors don’t need to worry as much about saving private keys or protecting mnemonics, the organization will need to incur the additional cost of developing some in-house solution to hold its own cryptocurrency.

Additionally, Bitcoin ETF spot will impact institutional capital flow distribution channels, making it easier for those who manage 401(k) retirement plans or handle investments on behalf of companies to include Bitcoin in their portfolios.

It’s worth noting that fees for Bitcoin ETF spot are lower than fees for Bitcoin ETF futures. Because contango tends to exist in the Bitcoin futures market, futures prices are higher than spot prices. Since then, the Future ETF has underperformed Bitcoin.

However, despite positive signals and predictions, the SEC continues to delay decisions on some Bitcoin spot ETF proposals due to concerns about market manipulation, liquidity, and the inherent volatility of the asset class.

Bitcoin ETF Spot Application Checklist and SEC Approval Deadline