What are the Opportunities with a Bitcoin ETF?

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• As rumors of spot ETFs spread in October, the price rose from below $27,000 to over $37,000 by November 10.
• In the latest report from Coinbase, it is stated that the final regulatory approval of a Bitcoin ETF would create a significant opportunity for the wealth management community, which manages one-third of the entire wealth in the U.S.
• David Duong, Coinbase’s Head of Institutional Research, said, ‘The opportunity could be much larger than just providing new access to the crypto market.’

Coinbase evaluates the importance of spot Bitcoin ETFs and the effects they will create in its latest report: Are billions coming?

Coinbase Examines the Effects of Spot Bitcoin ETFs

The possibility of a regulated spot Bitcoin ETF has driven crypto investors into a frenzy. It is expected that an ETF product will target millions of investors in regulated broker-dealer accounts. Since March, Bitcoin (BTC) has traded in a range with a support level of $25,000 and a resistance level of $30,000. As rumors of spot ETFs spread in October, the price rose from below $27,000 to over $37,000 by November 10.

Meanwhile, investors have added $366 billion to the total crypto market value since October. Coinbase says a Bitcoin ETF could add tens of billions more but notes that ‘it will take time.’ In its latest report, Coinbase stated that the final regulatory approval of a Bitcoin ETF would create a significant opportunity for the wealth management community, which manages one-third of the entire wealth in the U.S.

The San Francisco-based crypto exchange suggests that the opportunity targets an undiscovered market for the unique advantages of Bitcoin as an independent asset class: ‘These are participants who will not independently buy Bitcoin but rely on ETFs to create unique investment strategies.’

David Duong, Coinbase’s Head of Institutional Research, said, ‘The opportunity could be much larger than just providing new access to the crypto market.’ The argument is that the entry of a new participant class will enhance Bitcoin markets with new intelligence and perspectives:

‘ETFs will facilitate large money managers and institutions to buy and hold Bitcoin, which will increase liquidity and price discovery for all market participants.’

Additionally, the report notes that a Bitcoin ETF would allow savers in regulated money management accounts to access Bitcoin-based credit, futures, and options products.

Waiting for the SEC’s Decision

It is uncertain when the SEC will approve a specific Bitcoin ETF application. The Securities and Exchange Commission’s stance on cryptocurrencies seems to be softening, possibly due to a series of court victories that the crypto industry has won against the strong SEC. This includes Grayscale, a crypto hedge fund, essentially securing jurisdiction for SEC approval of a spot ETF.

JP Morgan expects the commission to approve an ETF by January 10. However, if the SEC takes a tough stance and starts rejecting ETF applications by that date, many members of the crypto community expect the price of Bitcoin to fall below $30,000 or even below $25,000.