BLOCKCHAIN, Expert opinions

Why can bitcoin ETFs harm the crypto industry?

The decision of the US SEC to approve the registration of spot bitcoin ETFs, long-awaited for the crypto market, did not lead to an increase in bitcoin exchange rate. Moreover, the market says that it can harm existing funds, crypto exchanges and the entire crypto industry as a whole. What do these concerns relate to?

Money flow

The market fears that funds in bitcoin-ETFs will come not from outside, but from other funds and crypto exchanges. According to the calculations of JPMorgan analysts, in total they will be able to withdraw about $36 billion from existing crypto products.

At the same time, bitcoin ETFs will pull about $20 billion of this volume from crypto wallets, and the rest will come from the funds already existing in the crypto market – for example, about $3 billion from the Grayscale Bitcoin Trust.

Significant benefits

Experts explain the increased interest in bitcoin ETFs in the market and their more favorable position compared to other crypto products by lower commissions than crypto exchanges offer. Bitcoin ETF fees range from 0.2% to 1.5%, while, for example, fees at one of the world’s largest crypto exchanges Coinbase reaches 2.5%.

At the same time, a number of companies-operators of bitcoin-ETFs are going to abandon completely the collection of commissions for some time. According to surveys, only 19% of those who took part in the study are able to have an account on the crypto exchange, while 88% of all respondents are interested in investing in cryptocurrency. Therefore, bitcoin ETF, of course, will become a tempting prospect for such people.


All this can ultimately negatively affect the crypto market as a whole, since any imbalance leads to adverse consequences for the entire industry. Since the US SEC announced the registration of the first bitcoin ETFs, the exchange rate of the main cryptocurrency has sharply gone down and has already dropped below the psychological mark of $40,000.

After euphoria about the emergence of a new crypto product on the market, market participants reduced their optimism significantly. In the future, bitcoin risks going to even lower levels and, quite possibly, will fall to $35,000-37,000.

By Dmitry Noskov, expert at StormGain, platform for trading, buying and storing cryptocurrency

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