The approval of spot BTC ETFs in the US in January 2024
[1] was a major event in the history of BTC and the development of the crypto market. Spot BTC ETFs help attract capital from traditional investors into BTC through ETF providers and help support the price increase of BTC.
Currently, the buying pressure from spot BTC ETFs has only affected the OTC market, but it has also helped to reduce the selling pressure on CEXs and has had a positive impact on the BTC price. In the future, it is expected that after the BTC halving, when the OTC market is not liquid enough to meet the demand for BTC accumulation from ETF providers, we will see the BTC price directly affected by the buying pressure of spot BTC ETFs. It can be said that spot BTC ETFs are a tool that amplifies the impact of the upward trend in the market during an uptrend, and of course, on the other hand, when the market enters a downtrend, it will be a tool that amplifies the impact of the downward trend, when traditional investors take profits on billions of dollars worth of BTC.
Currently, I believe we are in an uptrend because the BTC halving has not happened yet. We can remain optimistic for another 12-18 months after the BTC Halving before we need to worry about the fate of the market. Although I do not really support spot BTC ETFs, I even believe that it is a Trojan horse that Wall Street companies have put into the crypto market to destroy the demand for self-custody of crypto assets
[2], I also cannot deny its positive impact on BTC price. Even spot BTC ETFs could be the reason why BTC has created a new ATH before halving
[3].
However, what we have talked about above is only the first part of what spot BTC ETFs can impact the BTC price. I think its overall positive impact in the long term can be divided into 3 stages:
- Stage 1: Spot BTC ETFs reach interested investors who self-research to invest in spot BTC ETFs. Through advertising of spot BTC ETFs on the media, traditional investors who want to diversify their portfolios can learn about and choose to buy spot BTC ETFs. Investors in spot BTC ETFs in other countries will also switch to buying spot BTC ETFs in the US because they are more reputable and have lower management fees. I think this stage is happening and we can see a strong influx of new money [4], but this money is only temporary, easy to enter and easy to exit depending on the state of the crypto market.
- Stage 2: Investors are introduced to spot BTC ETFs by investment consulting firms [5, 6]. Investment consultants will suggest that investors allocate a portion of their portfolio to spot BTC ETFs to earn higher returns. Detailed information about each spot BTC ETF will be provided for investors to choose from. I think this will start soon after consulting firms have trained their employees on spot BTC ETFs. When this stage begins, the inflows into spot BTC ETFs will be larger and more stable.
- Stage 3: Investors invest in spot BTC ETFs without even knowing it [7,8]. They will only buy synthetic ETFs from the world's leading investment funds without knowing that those synthetic ETFs include a few percent allocated to spot BTC ETFs. We are seeing the first steps but they will surely take place and will help to maintain a huge flow of money, for example from pension funds, into spot BTC ETFs in the long term.
I personally believe that this is how things will play out. ETF providers will always want to have as much money invested in spot BTC ETFs as possible so that they can collect more asset management fees. And the best way to attract more capital is to make traditional investors optimistic about the future price increase of BTC. Price chart marketing will be the choice, and ETF providers have a reason to manipulate and keep BTC price going up this year and next year.
I would like to know your opinion on the multi-stage implications of spot BTC ETFs:
- In your opinion, at what stage are we in this multi-stage process?
- Do you anticipate a further positive influence of spot Btc ETFs on BTC price itself?
- If you were a participant in a pension fund, would you be comfortable with a portion of your assets being automatically allocated to spot BTC ETFs?
References:[1]
Spot Bitcoin ETFs Explained: Everything You Need to Know[2]
BTC spot ETF: Wall Street's Trojan horse[3]
BTC created new ATH before Halving: are you surprised?[4]
Bitcoin ETF Tracker[5]
Financial advisers seek ]uidance on recommending bitcoin ETFs[6]
Report: Morgan Stanley 'Racing' to Offer Bitcoin ETFs to All Clients[7]
Fidelity Unveils Crypto Exposure To Multi-Asset Etfs[8]
Bitcoin ETFs poised for US pension plan inflows, Standard Chartered analyst says
Note:- My opinion has been presented in a topic, on BitcoinTalk forum.
- This topic on AltcoinsTalks forum has included a minor change in the way my opinion is presented.
- This statement is to avoid accusations of plagiarism.