Spot Bitcoin ETF is the catalyst crypto investors need
A spot Bitcoin ETF would be an “inflection point” with crypto adoption — and a potential catalyst for $BTC’s price.
Getting one approved has been challenging, but recent developments are getting crypto execs excited.
No one likes a futures-based Bitcoin ETF
Futures-based Bitcoin ETFs can cost investors an extra 5-10% compared to holding Bitcoin directly. The difference between them:
- Futures-based Bitcoin ETFs don’t hold $BTC directly; instead, they invest in Bitcoin indirectly using financial contracts called “futures.”
- Spot Bitcoin ETFs would directly hold Bitcoin — and are seen as a safer way to invest in Bitcoin without directly buying it.
Since last October, the Securities and Exchange Commission (SEC) approved several futures-based ETFs — rejecting all spot Bitcoin ETF applications to date. But a recent approval is giving the industry hope:
- All prior futures-based Bitcoin ETFs were approved under the Investment Act of 1940.
- The first futures-based Bitcoin ETF was recently approved under the Investment Act of 1933.
Why does it matter? Approving the ‘33 Act product signals that the SEC is getting comfortable with a structure to approve a spot ETF — per the Head of ETFs at Grayscale Investments (Insider).
When will we finally see a spot Bitcoin ETF?
At this point, it’s anyone’s guess.
- Chris Matta of 3iQ — creator of the first Canadian Bitcoin fund — doesn’t expect one until the second half of 2023 or 2024 (Blockworks).
- Edelman Financial Engines founder Ric Edelman — expects approval in 2022/2023 with the SEC “running out of excuses to say no” (CNBC).
Canada launched their first spot Bitcoin ETF over a year ago. Australia is launching their first Bitcoin and Ethereum spot ETFs this week. Per Blockworks, Australia previously saw Bitcoin and other digital assets as too volatile and unfit for its financial markets.
Investors: Spot Bitcoin ETF
The largest futures Bitcoin ETF has $1.1B in assets. Nic Carter of Castle Island Ventures expects a spot ETF to be “the hottest commodity ETF launch of all time.”
He thinks it can reach $100B+ in assets within months (BBG). In comparison, the three largest spot gold ETFs have $108B in assets.
The most significant influx of demand could come from financial advisors:
- 32% aren’t increasing or making their first crypto investments from a lack of accessible investment options (i.e., ETFs, mutual funds) — per a Bitwise survey.
- 72% would be more likely to invest client assets into crypto if a spot ETF was available — per a Nasdaq survey.
By June 29, the SEC is expected to decide on Bitwise Asset Management’s spot Bitcoin ETF application.