What to Expect from Spot Bitcoin ETFs in 2024

• The SEC is expected to approve the first Bitcoin ETF on January 10th, allowing mainstream investors to gain exposure to Bitcoin without directly purchasing it.
• The SEC has rejected past Bitcoin ETF applications over concerns like market manipulation, but is now more likely to approve given major institutions applying and tailored filings.
• If approved, demand may be spread across multiple ETFs launching simultaneously. First day volumes may disappoint as gains are somewhat priced in, but flows should increase steadily over time.

The US Securities and Exchange Commission (SEC) is expected to approve the first Bitcoin exchange-traded fund (ETF) in the coming days, potentially as early as January 10th. This would allow mainstream investors to gain exposure to Bitcoin without having to purchase and custody the asset directly.

The History of Bitcoin ETF Applications

The SEC has rejected every Bitcoin ETF application over the past decade, citing concerns around market manipulation and lack of regulation given Bitcoin’s decentralized nature.

However, the chances of approval now look far more likely with major institutions like BlackRock and Fidelity applying. Applicants have also tailored their filings to satisfy the SEC’s concerns. Experts say it’s improbable the SEC would reject again after so much back-and-forth.

What if the Bitcoin ETF Gets Rejected Again?

While unlikely, if the Bitcoin ETF gets rejected again, the crypto market would react negatively. Bitcoin briefly crashed over 7% today following a bearish prediction that the SEC would deny the ETFs.

Multiple Competing Bitcoin ETFs Could Launch

There are over a dozen major firms seeking approval, including BlackRock, VanEck and WisdomTree. Rather than all the assets flowing into one ETF, demand could be dispersed across multiple approved products.

Grayscale‘s application to convert its Bitcoin Trust (GBTC) into an ETF is also pending. If approved, this could dominate flows given GBTC’s existing customer base.

First Day Trading Volumes May Disappoint

While a Bitcoin ETF should attract significant assets over time, trading volumes on day one may not be spectacular. With so many products launching simultaneously, demand could be spread out.

Some gains may also already be priced in after Bitcoin’s surge in 2022 amid the ETF hype. However, flows should pick up steadily, especially if multiple ETFs get the green light as expected.

Conclusion

The long wait for a Bitcoin ETF seems nearly over. While an approval won’t necessarily trigger an immediate Bitcoin price explosion, it should steadily funnel investment from mainstream markets into the crypto space over the long run.