Probably, its approval can be called the most anticipated event in crypto in recent times. But what is it? How much growth can we expect from Bitcoin if Bitcoin-ETF is adopted? And why will this event break the covenants of Satoshi Nakamoto?
☝🏼If an ETF is a fund that invests in certain assets, shares (parts) of which are traded on an exchange, then a spot Bitcoin ETF is nothing more than a fund that buys bitcoins into its own account and allows the investor to invest in digital gold through a regular brokerage account .
Bitcoin-ETF will be owned by large investment companies such as BlackRock (more than $10 trillion under management), Fidelity Investments ($4.2 trillion), Invesco ($1.4 trillion) and others.
Strengthening trust in cryptocurrencies
The most basic. People will begin to trust the entire crypto market more, because the state itself has officially given the green light.
Easy to buy BTC
Ordinary investors, funds and companies will no longer have to think about wallets, crypto exchanges, storage, scams, etc. I just went to my brokerage account and bought.
Injecting a ton of money into the market
Anyone who wants to buy shares of a spot Bitcoin ETF -> the fund uses the profits from the shares to buy new BTC for its portfolio -> that is, new $$$ is poured into the crypto market -> growth begins. For example, Galaxy Digital believes that approval will lead to Bitcoin appreciation by 74%.
❌ Disadvantages of Spot Bitcoin ETF:
Market manipulation
Those with big money have enough opportunities to move the price of BTC, and therefore most crypto assets on the market, to where it is more profitable for them and their funds.
Regulator dependence
The price of BTC will react more strongly to government decisions due to its connection with investment organizations that are required to comply with laws.
Centralization
Will we be able to maintain Satoshi's philosophy when the industry becomes inundated with possible trillions of dollars from funds that are firmly seated in the decaying fiat system, buying BTC and very likely to take over mining to change the Bitcoin protocol?
Fake possession of the cue ball
The Bitcoins will be held by the fund that launched the Bitcoin ETF. The buyer has only shares confirming his share in this amount of BTC. That is, buyers will not truly own crypto. Remember that your private keys are not your crypto.
Globally this is a bearish signal
The approval of the ETF will lead to an increase in the price of digital gold, but then we can expect a fall, because... big guys will need to buy cheaper in order to later sell it to the crowd at a higher price.
❗️Sometimes the hype around a future event creates a better moment for selling than the occurrence of the event itself. Remember the same launch of ETH 2.0, which, one might say, ultimately did not affect the price in any way, although there were conversations. Always independently assess all risks and opportunities.