According to data from the tailor-made crypto data analysis company Arcane Research, the market sentiment for an exchange-traded Bitcoin spot fund (ETF) is no longer optimistic, as market participants no longer expect a spot-based Bitcoin ETF in the foreseeable future.
The research firm points out that Grayscale’s Bitcoin Trust is currently trading at the lowest discount rate (around -16.35% lower than the actual Bitcoin price). In their opinion, this is an indication that the market expectation of a spot-settled Bitcoin ETF approval by the SEC has cooled significantly.
The result isn’t particularly good news for the marketplace and most of the key players. Since approving a futures-backed Bitcoin ETF, the SEC has had more demands to approve a spot-settled ETF as it would be more beneficial to the market.
While the two categories of ETFs both offer investors a way to get exposure to Bitcoin without having to hold the cryptocurrency themselves in custody, they differ in a few important ways.
For one, the approved Bitcoin futures ETFs, including VanEcks Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy ETF, do not offer direct exposure to Bitcoin, but rather futures contracts that track price movements in the Bitcoin derivatives markets. Cryptocurrency futures ETFs appear to have had the blessing from the SEC, who believe that the laws they use to provide the consumer protection they want to achieve in the cryptocurrency market.
In contrast, a spot-based Bitcoin ETF – which most market participants ultimately go for – will track the actual price of Bitcoin in the spot market and allow investors to get direct exposure to the asset through regulated exchanges. This type of ETF also removes the risk that exists with futures-based ETFs, where the price of the ETF can differ significantly from the price of the actual bitcoin.
On the one hand, Grayscale itself has stated that it remains very optimistic that its application to convert its Grayscale Bitcoin Trust (GBTC) into a spot-based Bitcoin ETF will eventually be approved. The company’s global ETF chief David LaValle recently said that he expects the SEC to approve the company’s application for a spot bitcoin ETF by July next year, significantly, when the SEC debate on filing expires.
On the other hand, the current futures-based ETFs have shown impressive performance in the market. The ProShares Bitcoin Strategy ETF (BITO), which first hit the market, was a hit from day one, quickly reaching over $ 1 billion in trading volume and taking just 2 days to reach $ 1 billion in assets under management US dollars to reach. Valkyrie’s later-launched ETF was also impressive as it hit over $ 80 million in trading volume on day one, making it the 15th most successful ETF in history, according to data from Arcane Research.
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