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How a spot Bitcoin ETF splits the market into optimists and pessimists

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The possible launch of the first-ever spot Bitcoin ETF in the US is one of the hottest topics of 2023. It has divided the crypto community into two camps: some believe that the launch will make BTC and the entire market skyrocket; others expect big problems. We have explored the arguments of both sides and are ready to share them with you.

ETF optimists: Bitcoin at $150,000 and billions of investments

One of the loudest advocates for the launch of a first-ever spot Bitcoin ETF in the US is Michael Saylor, the co-founder of MicroStrategy, the largest BTC investor among public companies. Saylor believes that the tool will attract trillions of dollars. In his opinion, a spot Bitcoin ETF will act as a magnet for institutional investors, whose money will pour into the digital asset market.

According to Bernstein analysts, the approval of such a tool could make BTC reach $150k by 2025.

The US Securities and Exchange Commission (SEC) Commissioner Hester Peirce has also supported a spot Bitcoin ETF. She is often referred to as “cryptomom” for her pro-cryptocurrency stance. Peirce thinks that there is nothing wrong with the new tool and that it “should have been approved five years ago.”

Mike Novogratz, CEO of Galaxy Digital, one of the largest liquidity providers in the digital asset market, is in the positive camp as well. He asserts that a spot Bitcoin ETF would enhance the cryptomarket’s credibility in the eyes of major investors, ushering in substantial and steady capital inflows.

Galaxy Digital analysts anticipate significant investments influx into the spot Bitcoin ETF in the US market, forecasting:

💰 $14 billion in the first year;

💰 $27 billion in the second year;

💰 $39 billion in the third year after post-launch.

They believe that the tool will reduce the crypto market volatility as a large portion of BTC will be under institutional control. Major investors are not interested in petty speculation.

ETF pessimists: centralisation and an overheated market

The main critic of the US-listed first-ever Bitcoin ETF is Arthur Hayes, former CEO of the top 50 crypto exchange BitMEX. He believes that the tool will increase crypto market centralisation.

The main contender for approval is the largest asset management company, BlackRock. Hayes asserts it can capture most of the free Bitcoins in the market. He also suspects BlackRock of collaborating with the US watchdogs, which means the company can carry out orders from regulators who are interested enough in making crypto suffocate.

Hayes thinks that the spot Bitcoin ETF launch in America and BlackRock's actions could kill BTC. However, negative predictions do not prevent him from expecting Bitcoin to skyrocket to $1 million by 2026.

Analysts from one of the largest banks in the world, JPMorgan, share concerns about the tool's pitfalls as well. They argue that the rumors surrounding an imminent launch have “overheated” the market. In their opinion, the launch itself may not meet investors’ expectations and, instead, lead to a market drop.

Despite the negative forecasts, JP Morgan analysts expect the ETF gaining approval before the end of 2023. Previously, itez combined all timings and predictions about the first-ever Bitcoin spot ETF in the US in one article.

A Twitter poll conducted by Bitcoin critic Peter Schiff, head of brokerage company Euro Pacific Capital, indicates that 23% of crypto community members expect BTC to drop amid the launch of the spot Bitcoin ETF in the United States. 

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Almost 9% believe this decline might happen even before the tool's approval. However, the majority (68%) do not care about cryptocurrency fluctuations since they intend not to sell it “till the Moon”.

Spot Bitcoin ETF: good or bad?

No one knows exactly how the market will react to the first spot Bitcoin ETF launch in the United States. Yet, in early November, we found out that the BTC halving could play a great role in shaping market dynamics.

Bitcoin halving is a split-in-half payment miners receive for Bitcoin mining, which occurs approximately every 4 years. The coin supply is limited; a total of 21 million Bitcoins will be issued, and more than 19.5 million of them have already been mined. Usually, halvings push BTC and the entire crypto market upward, as the reduced supply typically leads to scarcity and subsequent price escalation. The next halving will take place around the end of April 2024.

If the market starts to drop after the spot Bitcoin ETF launch in the US, halving could potentially rejuvenate market sentiment. Conversely, a positive market response to the tool’s approval might accelerate upward trends triggered by the halving.  

As we can see, there are more optimists than pessimists among crypto investors. Perhaps, this is the case when the majority is right.

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Here are three other cool articles:

What is a spot bitcoin ETF, and why does everyone talk about it

What's the deal with SEC chair Gary Gensler

Next Bitcoin all-time high prediction

This article is not an investment recommendation. The financial transactions mentioned in the article are not a guide to action. Itez is not responsible for possible risks. The user should independently conduct an analysis on the basis of which it will be possible to draw conclusions and make decisions about making any operations with cryptocurrency.

Maria Kachura
Maria Kachura

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