Coinbase: Approval of Bitcoin Spot ETF Will Increase Cryptocurrency Market Cap by Billions of Dollars

Zhitong App noticed that cryptocurrency market investors are increasingly believing that the U.S. Securities and Exchange Commission (SEC) will soon give the green light to exchange-traded funds (ETFs) that directly invest in Bitcoin. This belief has already had an impact on Bitcoin itself, as the most notable token's price has surged nearly 35% in just one month.

Supporters of Bitcoin spot ETFs believe that approving such products will open up Bitcoin investment to a wider range of investors, making it a more widely accepted asset class.

Coinbase Global, the largest cryptocurrency exchange in the United States, stated in a recent report that if approved, this product could open up the cryptocurrency market to participants in the traditional financial sector, including registered investment advisors (RIAs), retirement funds, and other institutions that have historically been unable to enter this asset class.

The report states that in the long run, Bitcoin spot ETFs could increase the market value of the entire cryptocurrency market by billions of dollars. The market value of this market was $1.38 trillion last Thursday. "While this will take time, we expect Bitcoin spot ETFs to lay the foundation for a more regulated environment, greater inclusivity, and substantial growth in demand."

David Duong, Director of Institutional Research at Coinbase, wrote, "This opportunity may not only bring new capital into the cryptocurrency market." "ETFs will relax restrictions on large fund managers and institutions buying and holding Bitcoin, which will improve liquidity and price discovery for all market participants."

In addition, the approval of Bitcoin ETFs "may also open the door to new products such as loans, futures, and options." If this becomes a reality, it can increase the adoption of existing cryptocurrency products by qualified investors and greatly expand their use.

Meanwhile, JPMorgan analyst Nikolaos Panigirtzoglou believes that approving Bitcoin spot ETFs will not bring in a significant amount of new capital. In a recent report, he pointed out that these ETFs have already been listed in Europe and Canada, and "investors have shown little interest since their inception."

BlackRock, one of the largest Wall Street companies awaiting approval for Bitcoin spot ETFs, will allow investors to gain exposure to Bitcoin without directly holding it. The company applied for the iShares Bitcoin Trust in June, and this move has driven up cryptocurrency prices as traditional finance continues to enter the cryptocurrency field. Asset management companies such as WisdomTree, Valkyrie, Ark Invest, and Invesco are also competing to be the first to promote this product in the United States.

When BlackRock applied for this product in mid-June, the price of Bitcoin soared from around $26,000 to slightly above $30,000 in just a few days. The token is now trading at a price below $36,000. The significant increase in the price of Bitcoin highlights investors' growing optimism about the potential regulatory approval of Bitcoin spot ETFs. Some industry giants predict that the first batch of approvals is expected to be granted as early as this year. Coinbase also believes that at least one physically-backed Bitcoin ETF is likely to be approved by the end of this year.

Duong pointed out, "In general, the SEC extends its decision window to the maximum extent allowed by its regulatory framework. In this case, the final deadline for the ARK-21Shares Bitcoin ETF application is January 10, 2024."