Previously, we discussed the implications of the U.S. Securities and Exchange Commission (SEC) approving a spot Bitcoin (BTC) ETF. Now that the SEC has approved several spot BTC ETFs, what comes next? 

Many of you have probably heard about the news of the spot Bitcoin ETFs being approved, and some of you have noticed the market shifts that followed. The approval of the spot BTC ETF is a major step towards transforming crypto from being a novel asset to one that’s very much in line with more traditional ones. Let’s talk about what comes after this monumental news.

For even more on the spot BTC ETFs or some of the implications from the approval, feel free to read our past Thunder Buzz articles!

Is There Enough Interest?

Now that the spot Bitcoin ETFs have passed, how much interest is there? 

To start, the market has been on a general bullish trend ever since rumors of the spot BTC ETFs started appearing. Now that the ETFs have been approved, the general sentiment for those in the crypto market continues to be bullish. 

Next, we will look at how the ETFs performed after approval. The first day of spot BTC ETF trading saw a titanic number of over $4.6 billion worth of shares traded (As reported by Reuters). Inflows at the beginning will generally set a tone for how things will be in the long run and the spot BTC ETFs certainly did well. Over the following days and weeks, the spot BTC ETFs continued to draw billions in trade .

BlackRock, in particular, acquired 11,500 BTC in just two days, outpacing the daily production of Bitcoin. With the demand starting to outpace supply, the interest in Bitcoin as a whole looks greater than ever. 

While the initial interest and performance for the ETFs were certainly strong, the real obstacle is maintaining trade volume and growth for the long term. To capitalize on the newly approved ETFs, many issuers have started cutting fees to incentivize investment and increase market shares. The simple fact is that for spot BTC ETFs to be relevant, it has to be a successful marathon. By lowering fees, issuers aim to draw more investors to dip into the spot ETFs. More stability will be established once enough investors are in the cycle, and the market is large enough.

In terms of estimates and predictions for 2024, many analysts have estimates ranging from a modest $5 billion to upwards of even above $100 billion. While some of these might be baseless predictions, it does show that the interest, at least right now, is still really high. All that’s left to do is observe if this trend can hold out (Though interest will generally decrease with time) and whether market performance continues to look strong.

More ETFs to be Passed?

As discussed last time, now that the spot Bitcoin ETF has passed, what about spot ETFs for other cryptocurrencies? 

The first one that comes to mind is the possibility of a spot Ethereum (ETH) ETF. Ethereum being the second most popular cryptocurrency, is the most likely to get the next spot ETF, but how likely is it?

BlackRock’s CEO Larry Fink has stated that he “sees value in having an Ethereum ETF”, which can be quite significant. BlackRock played a major role in the momentum that pushed the spot BTC ETF to be passed, so a positive outlook from their CEO for a spot ETH ETF is certainly good news. BlackRock, along with other institutions like Fidelity, have all filed for a spot ETH ETF after the success of the Bitcoin version. Though, while some major players are hopeful for a spot ETH ETF, it might still be quite far away. 

While many applications for a spot ETH ETF have already been sent for approval, the US Securities and Exchange Commission will likely not approve them any time soon. The first deadline on the calendar for approving a spot ETH ETF is on March 5th, and the SEC tends to delay. The consensus is that the SEC will want some time to monitor how spot BTC ETFs are doing before approving the next. So while ETH price might reflect bullish sentiments for a spot ETH ETF, we still need more time with Bitcoin’s spot ETFs to more accurately predict the SEC’s decisions.

Bitcoin Price Going Up?

Before the approval, prices hovered around $44,000 before taking off to above $48,000. A few days after this spike, however, prices for Bitcoin have dropped back down to around $42,000 at the time of writing. 

There are many guesses and takes on why prices have haltered at around $42,000 to $43,000. Some point to a potential Greyscale dump of 4000 bitcoins as the reason for the market shift. Others believe this to be a signal that spot ETFs aren’t going to do well. The obvious answer here, however, is that the drop is likely just the correction that’s been long overdue. The reality here is that Bitcoin has done well in 2023 and is already in a sort of mini bull run. With consistent growth over the last year, many have been looking to cash out for a long while, and the approval of the spot ETF is a good point for exit to get some gains in their portfolio.

As mentioned earlier, institutions are starting to outpace production for Bitcoin, so the demand is still there and it’s growing. It’s likely that, in the long term, Bitcoin will grow even further, especially considering the Bitcoin halving that’s also happening this year.

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What’s Next?

Thunder Buzz will continue to observe the hype surrounding Bitcoin and other popular topics like more spot ETFs and new trends in this landscape. Catch us next time for all the hottest news around!

Disclaimer

Tips offered in this article are not and should not be treated as financial or business advice. Please proceed with any financial actions at your own risk.