What Is the Hype Around Spot Bitcoin ETF?

With the bull run just around the corner, everyone is on the lookout for news or events that can trigger another emphatic surge in cryptocurrencies. And what other cryptocurrency would be on investors' watchlist than the pioneer and biggest cryptocurrency, Bitcoin?

Bitcoin has been on an incredible rally in recent weeks as it crossed $37,000, marking its highest market price since May 6, 2022. The reason behind Bitcoin’s recent surge is none other than the renewed hopes of a spot Bitcoin ETF approval.

There’s so much buzz surrounding the spot Bitcoin ETF, and most people believe it will ignite the next price rally. Will the spot Bitcoin ETF be approved, or will it contribute to a rise in Bitcoin’s price? No one knows, but we’re here to provide everything you need. Let’s begin!

Exchange-traded funds (ETFs) are new financial products that track the performance of an asset, index, or commodity. When you invest in an ETF, you’re essentially buying shares of a particular underlying asset or index—and you can trade the ETFs on a stock exchange just like traditional stocks.

Bitcoin ETFs allow you to invest in Bitcoin as shares without owning the cryptocurrency. And since ETFs are traded on traditional stock markets, investors don’t need to own a crypto wallet or trade on a crypto exchange—this allows traditional stock market investors to participate in the crypto market.

One significant thing about Bitcoin ETFs is that there are no issues of regulations, security, or technical complexities, and this has attracted massive adoption and interest from retail stock investors—little wonder why there’s been so much buzz surrounding Bitcoin ETFs.

Spot Bitcoin ETFs are the real deal—they allow investors to not just own shares in Bitcoin but hold the actual asset in real time while tracking its current market price. With spot Bitcoin ETFs, investors can trade Bitcoin itself without a crypto exchange but on the stock market.

The excitement surrounding spot Bitcoin ETFs stems from the fact that there are existing Bitcoin ETFs in the market—the Bitcoin futures ETFs—but the spot Bitcoin ETFs are considered more important. Bitcoin futures ETFs only allow investors to trade shares of Bitcoin futures.

Futures trading involves predicting the price of an asset at some point in the future, but spot trading involves trading the asset at the current market price. There are many prominent Bitcoin futures ETFs, including Bitcoin Strategy ETF (BITO) and VanEck Bitcoin Strategy ETF (XBTF), but investors are excited about spot Bitcoin ETFs—since they’ll be able to hold Bitcoin itself.

With spot Bitcoin ETFs, retail investors don’t need to open a crypto exchange account or own a crypto wallet, as they can trade Bitcoin as an asset on traditional stock markets. And since ETFs are properly regulated compared to the crypto market, institutional investors can adopt trading Bitcoin as an asset without any worries of hacks, frauds, or incoherent regulations.

The U.S. Securities and Exchange Commission (SEC) has yet to approve the launch of spot Bitcoin ETFs, but there have been a lot of applications from prominent industry players like Blackrock, Grayscale, WisdomTree, Valkyrie, and many others. 

However, there are spot Bitcoin ETFs outside the U.S., such as 21Shares Core ETP (CBTC), based in Switzerland. With the renewed hopes of a possible SEC approval soon, everyone has been thrown into a frenzy, leading to the recent surge in Bitcoin’s price.

The SEC has rejected many applications for a spot Bitcoin ETF in the past, but investors believe the result will be positive this time. The question on everyone’s mind remains: will the spot Bitcoin ETF approval cause a Bitcoin surge? No, probably not—the spot Bitcoin ETF doesn’t directly influence the cryptocurrency’s price.

However, the SEC’s approval could indirectly influence Bitcoin’s price. First off, there would be a significant increase in crypto adoption as retail investors demand Bitcoin, leading to a possible price surge. There would also be an improved market validation for Bitcoin as both institutional and retail investors participate in trading the asset.

Lastly, there would be improved crypto regulation as the interests of investors will be protected, ensuring risks of fraud, scams, or market manipulation are eradicated. These benefits could have a positive impact on Bitcoin’s price, causing a price rally.

The excitement continues to grow, and spot Bitcoin ETFs are close to becoming a reality; however, there is no guarantee that this will lead to a surge in Bitcoin’s price. Investors hope the SEC will finally approve a spot Bitcoin ETF launch, which could mark a new wave of cryptocurrency adoption.