What Comes Next for the Crypto Market Following the Approval of Multiple Bitcoin ETFs?

After a decade of persistent efforts, spot Bitcoin ETFs have received approval in the United States. This breakthrough sets the stage for their debut on major U.S. markets, including NYSE, Cboe Global Markets, and Nasdaq. The anticipation is further fueled by the participation of significant trading firms committed to providing liquidity. Trading is expected to commence as early as 4 a.m. ET, aligning with the opening of U.S. stock exchanges.

Inflows in Focus

Anthony Rousseau, Head of Brokerage Solutions at TradeStation, emphasizes the significance of monitoring expected inflows within the initial 24 to 48 hours. Projections vary, with some anticipating substantial to record-breaking flows, potentially reaching into the multiple billions — an unprecedented achievement in the ETF realm. Rousseau also highlights the long-term implications for the Bitcoin market, underscoring that financial institutions, managing over $100 trillion in assets, could gradually allocate funds to Bitcoin after navigating regulatory processes.

Potential Volatility and Challenges

Experts predict potential volatility in the next few days as spot Bitcoin ETFs track the underlying Bitcoin. Stuart Barton, Co-Founder at Volatility Shares, expresses concerns about the challenges of managing significant new Asset Under Management (AUM) investments within the first days of trading, given the large size of these ETFs and the daily volatility of the Bitcoin market.

The ETF Launch Race

The competition for spot Bitcoin ETFs intensifies, with major applicants, including BlackRock and Ark Invest/21Shares, reducing fees to stay competitive. Barton raises questions about the sustainability of such low fees, wondering if it remains a viable business opportunity. There’s speculation about the possibility of delays or non-launches for some spot Bitcoin ETFs on Thursday, adding an element of uncertainty to the launch event.

Spot Ether ETFs on the Horizon?

Looking ahead, attention may shift to spot Ether ETFs once the initial excitement of spot Bitcoin ETF approval subsides. Fidelity and BlackRock, prominent names in finance, have recently applied for spot Ethereum ETFs. The recent launch of ether futures ETFs, the first based on ether futures, further fuels expectations for a potential spot crypto ETF surge.

SEC’s Changing Stance on Crypto

SEC Chair Gary Gensler, previously critical of crypto, has been issuing warnings about it. The approval of spot Bitcoin ETFs by the SEC, influenced by the Grayscale opinion, signifies a noteworthy shift. Legal expert Coy Garrison suggests that the SEC’s stance on crypto, under Gensler, might only change if compelled by a court, highlighting the judiciary’s crucial role in enforcing regulatory boundaries.

The approval of spot Bitcoin ETFs marks a significant milestone in the cryptocurrency market’s evolution. As the spotlight shifts to potential challenges, future ETF launches, and the SEC’s evolving stance on crypto, the financial landscape continues to adapt to the growing influence of digital assets.