What will Bitcoin spot ETF bring?

Source: Guosheng Securities Institute

summary

Bitcoin ETF is based on Bitcoin spot assets. It is a compliance investment tool for investors in traditional capital markets holding Bitcoin.Whether the spot ETF can be approved in the United States is the focus of the market.Bitcoin ETF allows investors to obtain the opening of Bitcoin and related assets without the need to conduct research, purchase or storage actual cryptocurrency (or derivative assets), which is very suitable for compliance, costs, liquidity, and management costs.More vast capital markets and investors.Therefore, the market has always expected the US SEC to approve the Bitcoin spot ETF as soon as possible.

Fierce price fluctuations are one of the reasons for SEC to be cautious. Recently, a batch of spot ETF applications is in March next year.In the past, the Bitcoin spot ETF submitted by the US capital market has been repeatedly rejected by the SEC because the Bitcoin market investors have insufficient protection.On October 16, the industry media Cointelegraph posted fake news on X (formerly Twitter) that caused Bitcoin prices to fluctuate severe in the short term, resulting in a crystal position worth nearly $ 100 million in less than an hour.Similar situations are not rare in the cryptocurrency market, so the worry of the SEC is not unreasonable.The American SEC has postponed the application of Wisdomtree, Invesco, Galaxy, Valkyrie, Fidelity, VANECK, BITWISE, and Berlaide’s Bitcoin spot ETF applications. At presentBy mid -October, the final period is March 2024.It can be said that the application of Bitcoin spot ETFs in the US market has entered a peak period, and Bitcoin is expected to be around the beginning of April 2024. Therefore, whether this spot EFT has been approved has become the industry’s most concerned focus.

With reference to the promotion of gold price, the Bitcoin spot ETF is worth looking forward to.The launch of Gold ETF has actively promoted the price of gold, which is positive for Bitcoin spot ETF.It should be noted that the world’s recognition of gold is not generated by the spot ETF, and if the Bitcoin spot ETF is approved, it means that the recognition of the huge traditional wealth world on Bitcoin and even the web3.0 world will be further accelerated.The fusion of the person.This is a process from 0 to 1, and the marginal changes are far exceeding the Gold ETF approval.Of course, the other level is different. The total number of Bitcoin is fixed at 21 million, and gold still has continuously added new output.Bitcoin spot ETF is approved in the United States, which is expected to bring incremental funds.The conclusion obtained by Galaxy Digital calculated is that the first year of Bitcoin is expected to rise by 74%in the first year of the spot ETF (with the price of Bitcoin 26920 US dollars on September 30, 2023); for a long time, investing in bitcoin products for a long timeThe scale of potential funds is between $ 125 billion and $ 450 billion.

Information, fundamentals, and capital are expected to “resonate” next year.Looking at the three rounds of bulls and bears in Bitcoin since the birth of Bitcoin, Bitcoin is halved in the starting point area of the uplink market. This is the “good experience” at the information level.As a fundamental support, of course, the injection of incremental funds is the basis for the start of upward market.Judging from the current situation: Information Noodles: It is expected to usher in the fourth halving at the end of April 2024; fundamentals: RWA/Innovation and other innovation -driven industries are born, and new application innovations are being accumulated;The spot ETF is approved, which will bring great incremental funds.

Investment suggestion: It is recommended to pay attention to computing power mining stocks BTBT/DGHI/Iren/Riot/Mara/Bitf/CSLK/HIVE/WULF/BTCM/ARBK/BTOG/MIGI/BTDR, mineral manufacturer, COINBASE (cryptocurrency exchangeCoin), 0863.HK; Tun Coin MSTR, etc.

Risk Tips: The development of the blockchain business model is not as good as expected; the uncertainty of regulatory policies.

1.Core view

Bitcoin ETF is based on Bitcoin spot assets. It is a compliance investment tool for investors in traditional capital markets holding Bitcoin.In the past ten years, Bitcoin spot ETF has been repeatedly rejected in the US market, but with the growth of the cryptocurrency market and the recognition of cryptocarim assets in the traditional capital market.Although there are already Bitcoin spot ETFs in other countries and some Bitcoin futures ETF products in the US market, whether the spot ETF can be approved in the United States is still the focus of the market’s most concerned.

Looking at the three rounds of beef and bear conversion market since the birth of Bitcoin, Bitcoin is halved in the starting point area of the uplink market. This is the “good experience” at the information level.Facial support, of course, the injection of incremental funds is the basis for starting up.In terms of the current situation, the fourth halving is expected to usher in the end of April 2024; innovation -driven new industry applications such as RWA/Institute of Institute of Institution are born, and new application innovations are being accumulated;The approval of currency spot ETF will bring great incremental funds.

2. Bitcoin spot ETF application enters the peak period

2.1. Why is Bitcoin spot ETF important?

Bitcoin spot ETFBased on Bitcoin spot, it is a compliance investment tool for investors in traditional capital markets holding Bitcoin.Bitcoin spot ETF is an exchanges with Bitcoin as an underlying asset trading fund and is an index fund.Bitcoin ETF allows investors to obtain the opening of Bitcoin and related assets without the need to conduct research, purchase or storage actual cryptocurrency (or derivative assets), which is very suitable for compliance, costs, liquidity, and management costs.More vast capital markets and investors.

In comparison, Bitcoin Futures ETF underlying assets are Bitcoin futures contracts. The core difference between Bitcoin Futures ETF and spot ETF lies in basic assets.From the perspective of price fluctuations, the spot ETF and futures ETF are very similar. They are designed to accurately track the price of BTC to help investors get BTC exposure; usually the futures ETF cost is higher because they also involve futures contract operations, which is more complicated.Therefore, the market has always expected the US SEC to approve the Bitcoin spot ETF as soon as possible.

According to COINGLASS data, as of November 5, the mainstream 20 cryptocurrency exchanges wallet Bitcoin balance was 1.835 million, and 40 listed companies held a total of about 208,000 Bitcoin; according to Galaxy Digital’s calculations, as of the calculation of Galaxy DigitalOn September 30, Bitcoin investment products (including ETP and closed funds) held a total of 842,000 Bitcoin held -if it was calculated based on the price of Bitcoin 35,200 US dollars on November 5th, the COINBASE (Coin) trading platform, these, these, theseThe total value of Bitcoin is about $ 29.6 billion.

Existing Bitcoin investment products have problems such as high costs, low liquidity, and tracking errors. More importantly, these products still have compliance and compliance and compliance with traditional investor groups holding stronger funds.In terms of convenience, the management of Bitcoin in person also involves administrative burden such as wallet/private key management, independent custody and tax declaration.Therefore, Bitcoin spot ETF will be a more ideal investment tool.

2.2.

BTC spot ETF can be traced back to the 2013 Winklevoss twin brothers (Cameron and Tyler) attempting to launch BTC spot ETFs. He has applied several times in many years, but has not been successful. The plan is still stranded.At that time, in 2013, Bitcoin reached the pinnacle of the first bull market at $ 1163. As of November 5 this year, the price of Bitcoin had exceeded $ 35,000.The attractiveness brought by the rising price is the most direct factor for the capital market to pay attention to the spot ETF of Bitcoin.So many institutions have tried to launch Bitcoin spot ETF.

In the past, the Bitcoin spot ETF submitted by the US capital market has been repeatedly rejected by the SEC because the Bitcoin market investors have insufficient protection.On October 16th, local time, the industry media Cointelegraph posted a message on X (formerly Twitter) that the British spot ETF product ISHARES applied for Black was approved by SEC. This news stimulated that Bitcoin soared from $ 27,900 to $ 30,000.Subsequently, it was confirmed that it was adjusted after the false news, and it fell to about $ 2,7900, resulting in a cryptocurrency position worth nearly $ 100 million in less than an hour.Similar situations are not rare in the cryptocurrency market, so the worry of the SEC is not unreasonable.

The US Securities and Exchange Commission (SEC) has postponed the application of WISDOMTREE, Invesco Galaxy, Valkyrie, Fidelity, VANECK, BITWISE, and Berlaide’s Bitcoin spot ETF applications. At presentThe review time will be concentrated until mid -October, and the final period is in March 2024.It can be said that the application of Bitcoin spot ETFs in the US market has entered a peak period, and Bitcoin is expected to be at the end of April 2024. Therefore, whether this spot EFT has been approved has become the focus of the industry.Compared with ten years ago, this batch of Bitcoin spot ETF application agencies have appeared in traditional mainstream financial investment institutions such as Bellaide, that is, traditional financial institutions enter the Bitcoin spot ETF.The funds for cryptocurrency investment are expected to be based on traditional financial capital, which is different from the past.

2.3. Gray winning the SEC incident to bring confidence to the market

Before the Bitcoin spot ETF approval, crypture trusts such as GrayScale are alternative products for traditional financial markets to invest in cryptocurrency assets.As of November 4, the grayscale has launched a variety of cryptocurrency trusts including BTC, ETH, and cryptocurrency market.

Similar to the products of GTBC, investors can purchase and trade GTBC shares directly in the secondary market, but as a closed fund, there is no clear redemption rule at present.For a longer period of time, GTBC has maintained a negative premium. To solve the problem of liquidity, grayscale attempts to convert GBTC to ETF.On June 29, 2022, the SEC rejected the gray. Regarding the application of the Bitcoin Trust (GTBC, GrayScale Bitcoin Trust) to ETF application, and then the grayscale appeal, on October 23, 2023 Washington Special Economic Zone Tour Appeals CourtAfter the final ruling, the order of SEC canceled the decision to refuse the ash Bitcoin spot ETF application, and believed that the SEC rejected grayscale attempt to convert it about $ 17 billion in GrayScale Bitcoin Trust Fund (GBTC) to the spot ETF.Repeatedly “.This means that the SEC must re -accept the application of GBTC to the application of the spot ETF. Of course, its results still have the possibility of rejection, but the SEC must give new persuasive reasons.In order to show the importance of ETF to the gray degree, the grayscale specially opened a litigation page section on its official website to display it with the SEC lawsuit in the form of timeline.Essence

Although the grayscale winning the lawsuit does not mean that GBTC will be freely converted into ETF, the market believes that the Bitcoin spot ETF is getting closer and closer. The victory has injected great confidence into the market.Affected by this series of messages, as of November 4, the negative premium rate of Bitcoin Trust has continued to narrow to 12.77%.

The gray victory shows that the launch of the Bitcoin spot ETF does not have a “flaw” at the legal level, which has brought great confidence to the market.Quite heat.

3. What is the existing Bitcoin ETF market

3.1..Bitcoin spot ETF situation

Although the Bitcoin spot ETF application in the US market is not smooth, in fact, several other countries have approved the Bitcoin spot ETF in the United States. Among them, the top -ranking Bitcoin spot ETF includes:

Purpose Bitcoin Etef (BTCC) was launched in February 2021. The ETF traded on the Toronto Stock Exchange (TSX), which has always been very popular;
3 IQ CoinShares Bitcoin ETF (BTCQ) is another Bitcoin spot ETF traded in TSX;
QBTC 11 by Qr ASSET Management (QBTC 11) is the first Bitcoin ETF in Latin America and was launched on the Brazilian Stock Exchange (BVMF) in June 2021.As of November 4, 2023, QBTC 11 ETF held 727 Bitcoin.

These Bitcoin ETFs can follow the spot price performance of Bitcoin, so that ETFs can get Bitcoin opening, these ETFs successfully showed strong investors’ needs.Based on the price of 35,200 US dollars in Bitcoin of the Coinbase (Coin) trading platform on November 5, Bitcoin’s market value of about $ 700 billion, compared with the scale of ETFs, there is no doubt that there is still a lot of room for increase.Although Bitcoin ETFs can be traded in countries or regions such as Canada, Brazil and Europe, the spot Bitcoin ETF in the US market is still facing regulatory obstacles, and it is also the most anticipated product in the market.

3.2..Bitcoin Futures ETF has already done first

As Bitcoin leads the growth of the cryptocurrency market, cryptocurrency assets have gradually entered the field of view of traditional financial investment institutions.On December 18, 2017, the Chicago Commercial Exchange (CME), one of the world’s largest futures exchanges, launched Bitcoin futures contracts, and 8 days ago (December 10, 2017), Chicago Options Exchange (CBOE) Bitcoin futures contracts online became the world’s first (traditional financial market) Bitcoin futures contract.

Although the Bitcoin spot ETF, which has not yet been listed in the United States, has some Bitcoin Futures ETFs that have been listed in the United States.As of November 4, the total assets of Bito, XBTF, BTF, BITS, and DEFI have reached US $ 1.19 billion.Among them, Bito officially released by Proshares in October 2021 is the largest futures ETF in the statistical range, with total assets reached 1.08 billion US dollars.Secondly, the total scale of XBTF and BTFs issued by VANECK and Valkyrie is US $ 58.66 million and US $ 31.94 million, respectively.

The targets tracked by these Bitcoin Futures ETFs are usually Bitcoin futures contracts of Chicago Mercantile Exchange (CME).Among them, the largest Bito is the only futures ETF that configures the CME futures contract and implements the “rolling” futures contract.In addition, other futures ETFs are also equipped with a certain percentage of assets on the basis of configured CME futures contracts, such as XBTF and BTF configured US Treasury bonds, and BITS is equipped with blockchain ETF issued by other institutions.

Before the United States has approved the Bitcoin spot ETF, the futures ETF part meets the investment demand of some investment institutions on Bitcoin -related assets, but the size of 1.19 billion US dollars is comparedFar enough to meet the needs of the market.So the spot ETF has attracted so much attention.

4. What will Bitcoin spot ETF bring

U.S. Global Investors, after summarizing the experience of gold ETF, believes that after the launch of the gold spot ETF in 2004, as liquidity and programmatic transactions increase, gold prices rose 420%.The market impact after the launch of the spot ETF of the coin provides an experience reference and revelation; therefore, it is believed that the launch of the Bitcoin spot ETF will also open the space for rising related sectors.

It should be noted that the world’s recognition of gold is not generated by the spot ETF, and if the Bitcoin spot ETF is approved, it means that the recognition of the huge traditional wealth world on Bitcoin and even the web3.0 world will be further accelerated.The fusion of the person.This is a process from 0 to 1, and the marginal changes are far exceeding the Gold ETF approval.Of course, the other level is different. The total number of Bitcoin is fixed at 21 million, and gold still has continuously added new output.

Bitcoin spot ETF is approved in the United States, and it is expected to bring certain incremental funds.As of October 2023, the US wealth management market was managed by brokers (US $ 27.1 trillion), banks ($ 11.9 trillion), and registered investment consultants (US $ 9.3 trillion).Galaxydigital estimates based on this that the conclusion obtained is:

Bitcoin is expected to rise by 74%within the first year of the spot ETF approved (starting on September 30, 2023, the price of Bitcoin 26,920 US dollars); starting point);
For a long time, the potential capital of investing in Bitcoin products is between $ 125 billion and $ 450 billion.

Throughout the three rounds of bulls and bears in Bitcoin, Bitcoin is halved in the starting point area where the market has shifted.(The emergence of Bitcoin competition, the industry applications driven by Ethereum smart contracts, and innovation brought about innovative application brought about by innovative applications such as DEFI/dollar universe) as the fundamental support.EssenceLooking at the current situation:

Information surface: It is estimated that the fourth halving will usher in the fourth time at the end of April 2024;
Fundamental: innovation driving new industry applications such as RWA/Institute is born, and it is accumulating new application innovation;
Funding: If the Bitcoin spot ETF is approved, it will bring great incremental funds

Therefore, we believe that from the perspective of the three -way driver model, if the Bitcoin spot ETF is approved, it will be expected to bring positive factors to the market.

As the SEC gives the final approval period, the market pays more attention to the results of the approval and the specific opinions of the approval.According to the FOX Business reporter, the SEC approves new conditions for the spot Bitcoin ETF during a meeting with the ETF applicant, including the need for ETF to use cash creation.This means that the continuous advancement of Bitcoin spot ETF in the US capital market is the most concerned issue in the cryptocurrency market.

Investment suggestion: Pay attention to cryptocurrency -related sectors

We believe that if the Bitcoin spot ETF is approved, it does not only bring traditional financial capital to Bitcoin investment, but to promote traditional financial capital to enter the entire cryptocurrency market and even the Web 3.0 world.Therefore, it is recommended to pay attention to listed companies related to cryptocurrencies and Web3.0.

There are currently four types of related listed companies:

1) Computing power mining stocks: Carry out Bitcoin mining business through holding/custody computing power;

2) Mining machine manufacturers: R & D, production, sales of Bitcoin mining machines;

3) Crypto asset exchanges: provide services such as transactions, custody, and financial management for crypto assets;

4) Tu Coin shares: Bitcoin as the main allocation asset.

Risk reminder

The blockchain business model is not as good as expected: as a blockchain technology with cryptocurrency foundation such as Bitcoin, there are risks that are not as expected as expected; related algorithms and ecological development are not as expected, resulting in fluctuations in the market price of the cryptocurrency market.

The uncertainty of regulatory policies: At present, the regulatory policies of cryptocurrencies and Bitcoin spot ETF are still in the research and exploration stage, and there is no mature regulatory model. Therefore, the industry is facing the risk of uncertainty of regulatory policies.

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