The prospect of a regulated spot Bitcoin ETF has roused cryptocurrency investors into a frenzied bull run. They expect an ETF product to on-ramp millions of investors in structured broker-dealer accounts.
Since March, Bitcoin (BTC) has traded in a range bound by support at $25,000 and resistance at the $30,000 level. As spot ETF rumors spread in October, the price surged from below $27,000 to above $37,000 by Nov 10.
Meanwhile, investors added $366 billion to the overall crypto market cap since October. Coinbase believes approval of a Bitcoin ETF will likely add billions more but says, “this will take time.”
Coinbase: Why A Bitcoin ETF Matters
In a recent report, Coinbase said final regulatory approval for a Bitcoin ETF “will open up a massive opportunity for the wealth management community, which handles over a third of all wealth in the US.”
The San Francisco-based cryptocurrency exchange noted the opportunity addresses an untapped market of demand for Bitcoin’s unique benefits as a standalone asset class:
“These are not market participants that would otherwise buy and custody bitcoin independently, but instead rely on ETFs to build their unique investment strategies.”
David Duong, Coinbase’s head of institutional research, said, “The opportunity is potentially much greater than just enabling new capital to access the crypto market.”
His argument is that the entrance of a new class of participants will improve Bitcoin markets with new intelligence and insights:
“ETFs will ease the restrictions for large money managers and institutions to buy and hold bitcoin, which will improve liquidity and price discovery for all market participants.”
Furthermore, the report says a Bitcoin ETF will allow saver investors in regulated money management accounts to access Bitcoin-based lending, futures, and options products.
Waiting On The SEC
There’s no telling for sure when the SEC will approve any of a dozen Bitcoin ETF applications. The Securities and Exchange Commission seems to be softening its stance toward cryptocurrencies.
That could be because of a string of court victories the crypto industry has won against the powerful SEC. That includes crypto hedge fund Grayscale’s success in securing essentially a court mandate for the SEC to approve a spot ETF.
JP Morgan expects the commission to give an ETF the go-ahead by January 10. But if the SEC plays hardball and starts rejecting ETF applications by then, many in the cryptocurrency community expect Bitcoin’s price to drop below $30,000 or even $25,000.
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