The Crypto Market Underestimates the Growth of Spot Bitcoin ETFs

The world of cryptocurrency is known for its volatility, but according to K33 — formerly known as Arcane Research — it seems the market might be misjudging a significant development

by Faruk Imamovic
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The Crypto Market Underestimates the Growth of Spot Bitcoin ETFs
© Getty Images News/Dan Kitwood

The world of cryptocurrency is known for its volatility, but according to K33 — formerly known as Arcane Research — it seems the market might be misjudging a significant development. Recent reports indicate that the chances of a spot Bitcoin exchange-traded fund (ETF) being approved are increasing.

However, this optimism isn't yet reflected in the currency's price.

Boosted Chances, But Static Prices

On September 5, K33's senior analyst, Vetle Lunde, along with vice president Anders Helseth, released a market report suggesting that the previous quarter has shown promising signs for the approval of spot Bitcoin ETFs.

Yet, the sentiments haven't translated into price hikes for Bitcoin or its peers. Lunde and Helseth stated, "While Bitcoin has almost given up its gains in light of Grayscale's legal victory over the Securities and Exchange Commission (SEC), the approval would 'attract enormous inflows' and significantly increase the buying pressure for Bitcoin." Moreover, they argue that the consequences of a potential rejection for the spot ETF would be minimal at best.

Even in the face of a rejection, Bitcoin's prices would likely remain consistent. What seems particularly noteworthy is their challenge to the prevailing market sentiment. With several Bloomberg analysts now forecasting a 75% chance of a spot Bitcoin ETF being approved within this year, the two assert that the market's current viewpoint is fundamentally flawed.

“I firmly believe the market is wrong. This is, by all accounts, a buyer’s market, and it’s reckless not to aggressively accumulate BTC at current levels”.

Looking Beyond Bitcoin: The Broader Market

Supporting their bullish stance, the analysts referred to a recent 2% uptick in the Nasdaq-100, a tech-dominated index.

This rise is often perceived as a barometer of the overall market's risk appetite. Their implication? A stronger appetite for risk might just signal favorable conditions for cryptocurrency ETFs. Although Bitcoin did suffer a setback, plummeting below the $25,000 mark after recent developments, Lunde and Helseth remain steadfast in their optimism.

They believe that if a spot Bitcoin ETF is approved, it will trigger an enormous financial injection, exponentially escalating buying pressures. This isn't just about Bitcoin. They suggest that Ether might also capitalize on this wave, drawing parallels with Bitcoin’s impressive 60% surge weeks before the inaugural ETF based on Bitcoin futures was launched on October 19, 2021.

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