Europe Surpasses the US in Spot Bitcoin ETFs: A Deep Dive into the ETF Craze

• Despite the uncertainty surrounding ETF approvals in the US, Europe was more willing to give BTC a chance. London-based Jacobi Asset Management successfully launched Europe’s first spot Bitcoin ETF on Euronext Amsterdam.
• In June, BlackRock submitted a Bitcoin ETF application to the SEC, sparking renewed investor interest. BlackRock later established a “custody sharing agreement” with Coinbase.
• One obstacle to approving a spot Bitcoin ETF could be the nature of the investment. Unlike ETFs based on Bitcoin futures, a spot BTC ETF includes a fund that directly involves Bitcoin investment and presents unique challenges.

With the launch of a spot Bitcoin ETF in Europe, Europe has taken a step ahead of the US; what else has happened in the ETF frenzy?

Europe’s First Spot Bitcoin ETF Launched

The pending decision by the US Securities and Exchange Commission (SEC) on Bitcoin (BTC) ETF proposals submitted by various organizations kept traders on the edge of their seats. While US regulation was delayed, Europe provided some relief to the crypto community with its recent approval.

Despite the uncertainty surrounding ETF approvals in the US, Europe was more willing to give BTC a chance. London-based Jacobi Asset Management successfully launched Europe’s first spot Bitcoin ETF on Euronext Amsterdam. The ETF is named Jacobi FT Wilshere Bitcoin ETF and has been approved by the Guernsey Financial Services Commission (GFSC).

It will trade under the ticker “BCOIN.” Fidelity Digital Assets provides custody for the fund, while market-making operations are conducted by Flow Traders. Initially approved in October 2021, Jacobi chose to delay its listing plans due to challenging crypto market conditions.

In June, BlackRock submitted a Bitcoin ETF application to the SEC, sparking renewed investor interest. BlackRock later established a “custody sharing agreement” with Coinbase, which has the potential to influence the SEC’s thought process on ETF applications.

Custody sharing agreements allow for the sharing of information on market trading activity, settlement activity, and customer identity, and the possibility of market manipulation is almost negligible.

In addition to BlackRock, many other companies such as Valkyrie and Ark Invest are awaiting SEC review of their crypto ETF applications. What sets Valkyrie apart is that the company has transformed its Bitcoin ETF into an ETF that combines Bitcoin and Ethereum.

However, the SEC is still undecided on a spot Bitcoin ETF. The approval of Ark Invest’s spot ETF has once again been delayed by 21 days by the SEC. The regulator has the authority to delay all these ETF applications for up to 240 days. Interestingly, a spot Bitcoin ETF has not yet been approved in the US. Only ETFs based on BTC futures have been accepted.

One obstacle to approving a spot Bitcoin ETF could be the nature of the investment. Unlike ETFs based on Bitcoin futures, a spot BTC ETF includes a fund that directly involves Bitcoin investment and presents unique challenges. The SEC can delay crypto ETF applications using a window of up to 240 days, and some companies may have to wait until March 2024 to receive decisions on applications submitted in July 2023.

Potential Market Effects

According to a recent report, crypto ETFs create demand in the spot market and signal regulatory approval, thereby increasing retail and institutional flows in the pursuit of legitimacy. Analysts highlighted potential solutions to address the growing interest of global asset managers in Bitcoin spot ETFs and SEC objections, increasing the likelihood of approval.

Bernstein predicts a significant spot Bitcoin ETF market representing 10% of Bitcoin’s market value within two to three years. The broker expects strong brand marketing provided by asset managers and distribution efforts by retail brokers and financial advisors to bring gains to crypto ETFs.

According to Bernstein, fresh capital for a new crypto cycle will come from a new stablecoin supply. However, traditional asset tokenization and ETFs will also play a major role. The report noted that on-chain assets remained in the range of $40 billion this year. On the other hand, circulating stablecoins reached approximately $120 billion.

Status of Bitcoin

According to Santiment data, Bitcoin remained in a stable price range of $29,400 in August compared to stock markets such as the S&P500. This correlation-free movement, which began in mid-July, had positive results for crypto prices.

The ability of Bitcoin to remain stable amidst market fluctuations leads to various outcomes. Firstly, it increases investor confidence in its resilience, thereby attracting higher participation and investment from traders.

In addition, positive sentiments generated by Bitcoin’s performance can contribute to increased liquidity in the crypto space, making trading operations more efficient. Furthermore, regulatory considerations may be influenced by Bitcoin’s sustainable resilience, questioning biased views on volatility and speculative nature.

Traders Turning Bearish

Despite all these factors, traders have become more pessimistic. The increasing put-call ratio, indicating that many traders are betting that BTC prices could further decline in the near future, shows this. Investors may be adjusting their hedging strategies against market volatility or trying to take advantage of potential downward price movements.