What Happened to the Market After the Approval of BTC ETF Applications?

A very Great of year 2024 should be an important turning point for financial products related to Bitcoin, especially BTC spot ETFs (Exchange-Traded Funds) - on January 10, the U.S. Securities and Exchange Commission (SEC) officially approved 11 Bitcoin spot ETFs. This decision became the first major milestone of the cryptocurrency market in 2024.
Although the SEC stated that approving Bitcoin spot ETFs does not represent the approval of listing crypto securities, nor does it indicate endorsement or support for Bitcoin, the approval undoubtedly raises the crypto market's expectations for future upward development. The approval of Bitcoin spot ETFs signifies that Bitcoin will be recognized more broadly as an investment asset in the traditional financial market and bring more traditional market funds into the crypto market. Simultaneously, the successful trial of Bitcoin spot ETFs also gives hope to more cryptocurrencies applying for spot ETFs, such as the recently noticed Ethereum spot ETFs.
Of course, the market's focus on Bitcoin spot ETFs primarily revolves around:

• Whether it can drive the rise of BTC and the overall crypto market;
• Whether it can attract funds and which ETF(s) have more advantages;
• The views and trends of other countries/regions around the world.

The following is a compilation of information regarding these three focus points:

Market Trends

Based on the historical changes in the crypto market, significant positive developments like the approval of Bitcoin spot ETFs have a notable impact on Bitcoin's price. Thus, as the approval date approaches, the market generally predicts a trend towards a significant rise in Bitcoin prices following the ETF's approval. For instance, some experts forecast that Bitcoin's value could soar to $1 million, while other analysts hold a more conservative view, predicting a rise to $330,000.
However, another perspective suggests that the initial impact may be overestimated. Analysts point out that the actual inflow of funds might only be in the hundreds of millions of dollars. In support of this, within one day of the approval of Bitcoin spot ETFs, Bitcoin's price quickly rose to $48K but then swiftly fell, dropping below $40K within a few days, a decline of 20.6%.

Fund Flows

Statistics show that nearly $4 billion flowed into new Bitcoin spot ETF products after the ETFs were approved, particularly those launched by BlackRock and Fidelity. However, analysts at Deutsche Bank noted that $2.8 billion of this was offset by outflows from Grayscale's funds.
According to Bloomberg analyst @JSeyff's tweet, as of January 30, the fund flow data for the 10 Bitcoin spot ETFs are:
As the data shows, the total trading volume of Bitcoin spot ETFs in the U.S. on January 30 was $1.5643 billion. Of this, GBTC had a trading volume of $570 million, ranking first, followed closely by BlackRock's IBIT and Fidelity's FBTC. Meanwhile, since their launch, the total trading volume of Bitcoin spot ETFs has been $25.9384 billion.
It's worth noting that despite Grayscale's GBTC having the highest trading volume, it has consistently been in a state of substantial outflows. Analysts believe this is due to early investors redeeming for arbitrage after the product transitioned from a Bitcoin trust to a Bitcoin ETF, and the higher management fees of GBTC compared to similar market products might also prompt early investors to switch, leading to outflows as Grayscale sells off managed Bitcoin to meet redemption demands.
Excluding GBTC, the other nine Bitcoin spot ETFs are all in a state of continuous capital inflow. This influx of substantial new funds indicates that Bitcoin spot ETFs indeed have appeal for traditional institutions and investors.

International Response

Following the U.S. SEC's approval of Bitcoin spot ETFs, the crypto market remains optimistic about the subsequent applications and approvals in other countries/regions around the world. An article published by a Coindesk reporter, 'Bitcoin ETFs in and Around Asia After U.S. Approvals? Analysts Are Optimistic About Momentum,' highlights responses from several countries/regions:
Australia: Australia is expected to be among the first countries to approve Bitcoin spot ETF products, with the Australian Securities Exchange (ASX) likely to give approval in the first or second quarter of 2024. This positions Australia ahead of Hong Kong and Singapore in the race to approve such products.
Hong Kong: Hong Kong has shown strong interest in approving Bitcoin ETFs, and the U.S. approval might accelerate this process. The city is seeking to regain its status as a cryptocurrency hub, introducing a new licensing system for crypto exchanges and indicating readiness to consider applications for spot cryptocurrency ETFs. Meanwhile, Tencent News in China reported that Hong Kong's Harvest Fund Management has applied for a spot #BitcoinETF, which could be quickly approved, though the authenticity of this news remains to be verified.
Singapore: Singapore's regulatory stance on cryptocurrencies is described as hot and cold, emphasizing a balance between promoting technological innovation and guarding against speculative trading. Despite the U.S. SEC’s approval potentially influencing Singapore’s consideration of Bitcoin ETFs, the Monetary Authority of Singapore previously stated that Bitcoin spot ETFs could not be listed in Singapore.
UAE: Although interested in establishing itself as a cryptocurrency hub, the UAE may not immediately promote products like Bitcoin ETFs. Factors such as market liquidity from traditional financial participants and connectivity with the UAE market are considered before launching Bitcoin spot ETFs in the region.
These developments indicate that interest in Bitcoin ETFs outside the U.S. is growing, with jurisdictions worldwide exploring how best to handle the regulatory approval and market readiness complexities of such products. The U.S. approval is an important benchmark that could influence the pace and direction of global cryptocurrency regulation and market development.

Ethereum Spot ETF

Following the approval of the Bitcoin spot ETF, there's increased anticipation in the crypto market for the approval of an Ethereum spot ETF. However, according to recent news, the U.S. SEC has once again delayed its decision on the Ethereum spot ETF. Analysts believe that the probability of approval for the Ethereum spot ETF is only 60%, and if it is not approved by May, it's expected to be delayed until 2025 or 2026.
Nonetheless, the approval of the Bitcoin spot ETF is still likely to impact the Ethereum spot ETF. The main reasons are:

• The approval of the Bitcoin spot ETF has created a regulatory precedent, potentially paving the way for an Ethereum ETF. Regulators in various jurisdictions may view the successful implementation of the Bitcoin ETF as a model for Ethereum ETFs.
• With the success of the Bitcoin ETF, traditional institutions and investors' interest in the crypto market is growing daily. Previously hesitant institutional investors may show greater interest in Ethereum and other mature cryptocurrencies, leading to more applications for Ethereum ETFs.
• The approval of the Bitcoin ETF has bolstered market confidence in cryptocurrencies as a legitimate asset class. This may positively influence perceptions of Ethereum ETFs, making them more attractive to regulators and investors.

Conclusion

With the U.S. Securities and Exchange Commission’s (SEC) approval of the Bitcoin Exchange-Traded Fund (ETF), we are witnessing a significant moment in the history of the cryptocurrency market. This milestone not only represents the elevation of Bitcoin and other cryptocurrencies in the global financial system but also indicates the future direction of the cryptocurrency market.
The approval of the Bitcoin ETF provides both institutional and individual investors with a new, regulated investment avenue and injects more confidence and legitimacy into the entire cryptocurrency market. With more capital inflow, we can anticipate an increase in market liquidity and stability, as well as further expansion of cryptocurrency technology innovations and applications.
However, we must also recognize that, while the emergence of the Bitcoin ETF is a positive development, the cryptocurrency market still faces regulatory, market volatility, and technological challenges. The future may be filled with uncertainties, but the approval of the Bitcoin ETF undoubtedly paves the way for the future of cryptocurrencies, opening up new possibilities.
As many observers in the field have pointed out, the emergence of the Bitcoin ETF is a pivotal turning point. It not only impacts Bitcoin itself but also has far-reaching effects on the entire cryptocurrency ecosystem and the broader financial market. We will continue to monitor the developments of this dynamic market and how it shapes our understanding of finance and investment in the future.