The recent decision by the United States Securities and Exchange Commission (SEC) to approve the country’s first spot Bitcoin exchange-traded funds (ETFs) has generated significant excitement and curiosity in both traditional finance (TradFi) and decentralized finance (DeFi) sectors. The anticipation revolves around the potential impact of this historic decision on the markets and, specifically, on Bitcoin itself.
However, in Europe, the excitement surrounding a Bitcoin ETF has somewhat faded, as the continent welcomed its first spot Bitcoin ETF on August 15, 2023. The Jacobi FT Wilshire Bitcoin ETF was introduced on the Euronext Amsterdam stock exchange, over a year after its originally planned launch. This ETF was issued by the London-based firm Jacobi Asset Management and was heralded as the first physical-backed Bitcoin fund, offering investors exposure to a financial product backed by BTC. It was also categorized as an “environmental investing” or Article 8 fund, promoting environmental and/or social characteristics.
As the U.S. takes steps in this direction, Grzegorz Drozdz, a market analyst for the European Union-based financial services platform Conotoxia, discussed the market implications of U.S. spot Bitcoin ETFs, especially from a European perspective.
Drozdz noted that the introduction of Bitcoin ETFs in general has significantly democratized access to the market, extending beyond traditional cryptocurrency exchanges and wallets. However, he pointed out that their current size remains relatively small when compared to the overall financial and crypto market. The global capitalization of the cryptocurrency market stands at $1.78 trillion, with existing investment funds in this sector accounting for only 2.9% of the total crypto value.
Regarding the European Economic Area, Drozdz mentioned that it seems more open to institutional investment in crypto with the launch of its Bitcoin ETFs. However, he noted that the introduction of such funds in Europe has not yet generated significant inflows from institutions.
He emphasized that market expectations are primarily focused on the approval of such instruments in the U.S., which could potentially influence the long-term development of the crypto world. Nevertheless, he anticipates challenges in accurately gauging the scale of capital poised to invest in this market with financial products representing only 2.9% of total capitalization.
In conclusion, Drozdz highlighted the potential for a rapid increase in the inflow of new funds brought about by Bitcoin ETFs from institutions and investors, which could signify the beginning of a new bull market. This sentiment aligns with speculation from analysts and social media communities in the lead-up to the SEC’s decision. Given that Bitcoin still accounts for a significant portion of the market’s capitalization (53.7%), its success could have a substantial impact on the rest of the digital currency space.
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