Author: Mu Mu/Baihua Blockchain/ Source
Recently, the Bitcoin spot ETF that the market has been waiting for for several years has finally been approved. Domestic and foreign media have used eye-catching words such as "milestone", "recorded in history", and "big official announcement" to describe the sensation of this event. However , After learning about it, the crypto market performed mediocrely, and even began to decline two days later. This left many people confused. Is the adoption of the Bitcoin ETF a good thing or a bad thing ? What are the material impacts in the short and long term? Today, let’s analyze one by one the changes you need to know after the adoption of the Bitcoin ETF….
01
Spot ETFs: Don’t overestimate and don’t underestimate its impact
The market is always affected by financial sentiment, and all directions are based on overwhelming consensus. When an event occurs, people tend to overestimate its short-term impact and underestimate its long-term impact, or misjudgment due to information asymmetry. So, rationally look at the impact of spot ETFs from multiple angles.
1) Will the good things come true and only the bad things remain? not necessarily
In the past, there was always a popular saying that "good things come true" and only bad things remain. The adoption of the Bitcoin spot ETF is a long-awaited big good news. In fact, in general, most of the expectations have been released before the implementation. From the past year, Bitcoin's It can also be seen in strong trends.
But if the implementation of good news is bad news, that is not necessarily the case. In addition to short-term profit-taking and callbacks, we have actually seen that the trading volume data of approximately US$4.6 billion on the first day of the opening of spot ETFs is quite impressive compared to various newly opened ETFs, and is in line with the new trend of traditional financial channels. The expectation of capital inflows has formed a strong new buying order over time.
2) The encryption market has one more indicator
Bitcoin spot ETF actually has a very similar reference, which is the gold ETF. Take the world's largest gold ETF "SPDR Gold Trust" as an example. Because it has a relatively large share of holdings, it is usually based on whether it increases or decreases its gold holdings. As a data basis for judging gold price trends, it has a strong indicator.
Judging from GBTC’s hundreds of thousands of BTC holdings in the past, it is expected that the Bitcoin spot ETF will only increase but will gradually become like the gold ETF. Daily position adjustments will become one of the major indicators of the crypto market, affecting the direction of the crypto market. , then the following historical rules of the impact of gold ETF holdings on gold prices have reference significance:
The trading volume increases, the ETF gold holdings decrease, and the price rises, indicating that the price may fall soon;
Trading volume increases, ETF gold holdings and prices fall, and prices may turn to rebound;
Trading volume, ETF gold holdings increased, and prices rose, indicating that prices may continue to rise;
Trading volume and ETF gold holdings have increased, prices have fallen, and prices may fall in the short term;
Trading volume and ETF gold positions have decreased, prices have fallen, and prices may continue to fall in the short term;
Trading volume, ETF gold holdings have decreased, and prices have increased, indicating that prices have risen in the short term and may fall back soon;
Similarly, when the Bitcoin spot ETF holdings reach a certain share, it will have a similar impact on the encryption market.
3) Beware of Grayscale GBTC to ETF conversion
Among the 11 approved spot ETFs, most of them have entered the market for the first time and are in net buying status. Grayscale’s GBTC is definitely a counterexample, because in the past, Grayscale GBTC Trust has been at a negative premium for a long time, with more than 600,000 holdings. Some investors have been holding back for a long time. After a bear market, it is understandable that many people choose to take profits. Therefore, we will see short-term capital outflows from GBTC, and the amount is not small.
But for now, thankfully, the inflow of other spot ETFs far exceeds the outflow of "anti-bone boy" GBTC. Bloomberg ETF analyst Eric Balchunas posted on the X platform that in the two days since the Bitcoin spot ETF was listed, nine issuers Institutions have absorbed $1.4 billion in funds, surpassing GBTC’s $579 million outflow, for a total net inflow of $819 million.
Translation: Nine Newborns has attracted $1.4 billion in new funds so far, far exceeding GBTC’s $579 million outflow, with net inflows reaching $819 million. Currently, IBIT leads the pack with $5 billion, with Fidelity not far behind. Xinsheng’s trading volume reached $3.6 billion across 500,000 individual trades (total trading volume including GBTC was 1.2 million), an impressive performance with an average premium of 20 basis points.
4) Will Bitcoin become centralized from now on, controlled by Wall Street and hijacked by ETFs?
Some people oppose spot ETFs, believing that although it has promoted Bitcoin from an alternative asset to a mainstream asset, it has also weakened the decentralized nature of Bitcoin , because the huge inflow of traditional capital brought by ETFs will dominate the Bitcoin market in the future. Its pricing power is controlled by Wall Street.
The author believes that this concern is reasonable, but it may be that the capacity of spot ETFs is overestimated. Because compared to the billions of trading volumes and positions worth hundreds of millions of spot ETFs, the daily trading volume of Bitcoin on mainstream crypto asset trading platforms is as high as 10 to 20 billion, and the main battlefield for Bitcoin trading is still on the platform. Currently, most of the new funds entering through ETFs are not familiar with the characteristics of Bitcoin and are worried about compliance and other reasons, so they do not enter directly from the trading platform. With the approval of ETF, the platform will also be more closely monitored, and the compliance and stability of the Bitcoin trading market will be better guaranteed.
At present, the funds of spot ETFs are managed by centralized platforms, which are also managed by centralized platforms. Why not just choose an encryption platform with no management fees, lower costs, and more flexible management? Therefore, after some new funds become familiar with the characteristics of crypto assets such as Bitcoin, they are likely to switch and disperse to compliant and regulated crypto asset platforms in various countries around the world. In this way, it is difficult for spot ETFs to actually form an overwhelming advantage . When these funds are further advanced, you can even get a freer asset management and value-added experience through DeFi.
Of course, the U.S. stock free market itself is a gaming field. Small-volume stocks are often manipulated, but the larger the volume, the harder it is to control at will. Compared with the traditional financial market with strict supervision, the crypto market used to be a complete jungle. Under the law, it is easier to influence the market through various means without worrying about supervision. Now that there is strict tracking by the SEC, it is much more regulated.
As for the so-called "rich people taking over Bitcoin" in the future, this is not something we can change, but this does not affect the continued operation of Bitcoin in accordance with its original openness and transparency principles, because only in this way can the interests of the rich themselves be obtained Assure.
There is no absolute decentralization in this world. The word "decentralization" does not appear in the Bitcoin white paper. It is different from the "decentralization" that people later understand. Its original meaning is decentralization, sufficient decentralization, and anti-fragility. sex, transparency, and a financial system that does not allow concentrated power to do evil behind the scenes.
In fact, this is true even for gold that has strong physical properties and is physically decentralized. The main mining of gold relies on concentrated gold mines, and the mining rights are often only in the hands of a few institutions. However, because global positions are dispersed enough, gold holdings are huge. The impact of ETFs on gold prices is also very limited, and the rebalancing of gold ETFs often lags behind the market reaction. That is to say, after the market is affected by macroeconomic and other major events, causing the gold price to rise and fall, gold ETFs are sold in large quantities. Or buy, and positions will be adjusted after the market closes that day.
Therefore, rather than saying that ETFs affect the market, it is better to say that the market affects ETFs and ETFs follow the market.
5) The impact of ETFs on the Bitcoin ecosystem
The approval of spot ETFs will undoubtedly give a "reassurance" to the crypto industry, including the Bitcoin ecosystem. Bitcoin assets may become more stable and less volatile in the future.
To put it simply, in the past, when there was great volatility, the development of ecological projects in bear markets often encountered obstacles. Entrepreneurs and users lacked confidence and tightened their belts. There were problems such as a significant reduction in the amount of financing and a loss of talent.
As a native asset of the Bitcoin ecosystem, the steadily rising price of Bitcoin is beneficial to ecological development and avoids the impact on ecological development under extreme market conditions.
In general, the approval of spot ETFs can give the Bitcoin ecosystem more confidence to develop and gain more recognition.
02
Next step, will the market focus turn to Ethereum spot ETF?
1) Ethereum ETF expectations
Regarding the sudden rise in Ethereum prices before and after the adoption of the Bitcoin ETF, many people explained that funds began to focus on the next Ethereum spot ETF that has applied for approval and is about to be approved, including funds that have already taken profits and those who are expected to invest in this round of Bitcoin ETFs. If the market is not on board, I hope that the expected market trends brought about by the Ethereum ETF can "eat meat".
This type of strategy is very common. When an asset is positive, short-term similar assets are expected to rise immediately . So how long can the Ethereum ETF be expected to last? BlackRock’s application for an Ethereum ETF will receive a response in May at the latest. Will it be delayed like Bitcoin?
In terms of the current attitude of the US SEC towards crypto-assets such as Ethereum, it currently treats Ethereum as a vague area between commodities and securities. That is to say, it is neither accurately positioned as a commodity like Bitcoin, nor is it completely concluded that Ethereum is a security. Previously, the SEC had almost made it clear that Ethereum was not a security, but this was mainly due to new changes caused by Ethereum switching from the POW consensus mechanism to the POS consensus mechanism.
In addition, for the Ethereum ETF to pass, it needs to be less susceptible to the control of certain institutions like Bitcoin, and the conditions are relatively strict. The Bitcoin ETF can pass because the share of the world's number one trading platform has declined, and the other is that there are too many institutions (capital) applying for ETFs. If it fails to pass, it may lead to lawsuits.
In general, the good thing about the Ethereum ETF is that there are still a few months left, which is enough time for Ethereum to gain market attention. There is no need to worry too early about the negative impact of failure or delay, but the probability of passing may not tall.
The main variable is whether the US SEC has sufficient understanding and confidence in the POS version of Ethereum, and whether the external pressure from large financial institutions driven by the interest of various investors can be in place. This depends on the Bitcoin spot ETF. Whether it can operate stably and if the overall trend of the crypto market is good and brings strong interest from global investors, capital, driven by interests, will be happy to promote the adoption of the Ethereum spot ETF.
2) The medium and long-term expectations of Ethereum are not ETFs
In fact, compared with the short-term focus on whether the Ethereum spot ETF can pass, Ethereum is more worthy of attention because of its series of upgrades including the latest major upgrade "Cancun". Ethereum is still the largest application ecosystem in the encryption industry. Infrastructure, compared to the Bitcoin ecosystem, the Ethereum ecosystem has come a long way, with better infrastructure and better deployment solutions. Now Layer 2 has been successfully implemented and stably adopted, and Layer 3 will also be launched one after another . In general, Ethereum In fact, Fang Ecosystem has begun to prepare the basis for deploying large-scale applications in various tracks. Large-scale applications are also likely to be one of the main foundations for the arrival of the next big market.
There are still differences between Ethereum and Bitcoin. The most important attribute of Bitcoin is the concept of "data gold" as an asset, so ETF is very important to it, while Ethereum comes from the value empowerment of innovative applications. In the medium to long term, Ethereum's expectations mainly come from its innovation . After the Cancun upgrade, there will be more important innovation upgrades on the way. Therefore, instead of focusing on the Ethereum ETF, we can actually pay more attention to its follow-up Technological innovation and upgrading.
03
summary
After the adoption of the Bitcoin ETF, it is not the end of a good thing, but the beginning of a milestone. It has brought many changes and impacts, and we should treat it rationally. Both the Bitcoin ecosystem and the Ethereum ecosystem are one of the main narratives of the future encryption industry. What is certain is that in 2024, we will see the growth of crypto assets accelerate at a speed visible to the naked eye.
source:
