exchange traded funds (ETFs) based on cryptocurrencies like bitcoin (BTC) have been around for a while, but the industry is still waiting for something significant. There is still no ‘spot ETF’ approved in the United States. According to the co-founder of crypto ETF publisher Volatility Shares, a spot ETF for bitcoin is going to be very favorable for the price.
Market is still waiting for Bitcoin spot exchange fund
Volatility Shares co-founder Justin Young said so in a interview with crypto. Investors are typically looking for the “easiest and most regulated way” to get their money exposed in something, he said. For bitcoin, a spot ETF would be the best solution for that.
When you buy a crypto exchange fund in the US, you are generally buying shares in a fund that trades crypto futures contracts. The US Securities and Exchange Commission (SEC) considers this the safest option because it would prevent market manipulation.
When BlackRock applied for a bitcoin spot ETF, it brought renewed hope to other ETF issuers. Many companies have applied for spot ETFs several times, but without success. The US is the odd one out in this; for example, such ETFs have already been approved in many other countries, including the Netherlands.
“Bitcoin spot ETF is near”
Last week we wrote about a special exchange fund for bitcoin, namely the ‘2x Bitcoin Strategy ETF’ from Volatility Shares. With this fund with the stock symbol BITX you have twice as much exposure to price fluctuations thanks to the built-in lever. Young thinks the fact that this fund has received SEC approval is a sign that approval of a spot ETF is just around the corner.
“Why (should the SEC) not approve a spot ETF if they allow a leveraged exchange fund?” asked the CEO in the interview. Still, he thinks the reasons the SEC cited in the disapproval are justified. Because the funds that have applied for such an ETF go to great lengths to meet the requirements, he thinks it will work out in the end.
It’s no secret that the SEC has reservations about many crypto exchanges, which is why an approved spot exchange fund could be very good for the market. It could also make bitcoin less volatile over time by bringing more investors to the market. In that respect, he thinks the opposite of JP Morgan, who thinks the impact will be negligible.