“Virtual fantasies are surpassing reality: Imaginary bitcoin ETFs boast a staggering 30-fold value compared to their physical counterparts.”
In the world of cryptocurrency, it seems that the more we talk about it, the more it gains attention and value. This phenomenon has been observed with ethereum, as the announcement of its blockchain validation method change last year caused a significant stir. The correlation between crypto values and publicity is undeniable, with social media and mainstream media coverage being the most influential factors.
This year, the spotlight is on the spot bitcoin ETF. A US judge recently ruled that it was unfair for the SEC to allow bitcoin futures ETFs while blocking ETFs that hold bitcoin. This ruling is likely to force the SEC to approve spot bitcoin ETFs, which has caused a surge in bitcoin’s market cap. Since the SEC’s defeat, bitcoin has gained $168 billion in market cap, surpassing the gains of gold, the Nasdaq Composite, and ethereum. The main driver behind this surge appears to be the hype around ETFs.
Interestingly, recent demand for bitcoin seems to be coming from institutional investors rather than retail punters. While retail interest in bitcoin has been relatively flat, open interest in CME bitcoin futures contracts has spiked, indicating institutional involvement. This institutional demand is likely in preparation for the ETF marketing blitz, as buying bitcoin now will drive up its price.
The SEC has until January 10 to respond to an application for a spot bitcoin ETF, but industry experts believe a response will come sooner. Several asset managers, including Grayscale and BlackRock, have already made formal registrations to launch spot ETFs. The main advantage of a spot ETF is its direct form of ownership, as it does not rely on derivatives like synthetic funds do. However, experts believe that the spot advantage is marginal and unlikely to be a game-changer for crypto markets.
Currently, there are 29 active bitcoin ETFs globally, with a total of $5.6 billion in fund assets. Of this total, $3.1 billion is in physically backed funds, while $2.5 billion is in synthetic funds. The interest in existing bitcoin ETFs has been relatively low, indicating that the introduction of spot bitcoin ETFs may not have a revolutionary impact.
In conclusion, while the hype around spot bitcoin ETFs is driving up bitcoin’s price, it remains to be seen whether it will have a lasting impact on institutional ownership of crypto. There is a possibility that the excitement will fade, and attention will shift to other events in the crypto world. But for now, the focus is on the future and the potential opportunities that lie ahead.