How will BlackRock’s Bitcoin ETF approval impact the broader cryptocurrency market?
- BlackRock’s Bitcoin ETF approval signaled a new era for cryptocurrency investment options. Increased liquidity from Bitcoin ETFs could drive investment into memecoins and NFTs.
In recent days, significant attention was drawn to the U.S. Securities and Exchange Commission’s (SEC) approval of BlackRock’s proposal to list and trade options for its spot Bitcoin [BTC] ETF, IBIT.
Approved on the 20th of September, the SEC fast-tracked the decision, granting the world’s largest asset manager the green light to list these options.
Source: www.sec.gov
The approval allowed the options to be traded on the Nasdaq ISE, LLC, marking a major milestone in BlackRock’s BTC-related initiatives. This signaled a new chapter for cryptocurrency investment options.
Exec’s nuanced view
Highlighting why BlackRock’s Bitcoin ETF stands out as the top choice, Joshua Lim, co-founder of Arbelos Markets, shared insights in a recent X thread.
Lim pointed out several key factors that make Blackrock’s BTC ETF the best bet in the current market.
He said,
“BTC is a digital-native asset by definition, it’s a lot easier to financialize it and move it around for trade settlements than other commods. IBIT and the other ETFs have increased velocity making certain otherwise cold-storage-bound BTC available for liquid trading.”
Expanding on his argument, Lim emphasized that prime brokers providing margin lending in USD against BTC collateral could substantially boost the cash supply within the crypto market.
This increased liquidity, he suggests, would likely find its way into riskier segments of the ecosystem, with capital moving from spot bitcoin ETFs into speculative assets such as memecoins and NFTs.
Lim believes this shift could stimulate further investment in these alternative assets, reshaping the broader crypto landscape.
He also added,
“Options markets on IBIT (and market-maker willingness to bear the risk) will make it easier to price the risk inherent in margin lending against IBIT and make it more likely for prime brokers to lend against crypto… there will be an altcoin boom.”
Its impact
Now the obvious question arises: How will this approval influence the trajectory of the world’s largest cryptocurrency?
To which the ETF Store President Nate Geraci replied,
Source: Nate Geraci/X
Even while the approval was still in the pipeline, Bloomberg’s senior ETF analyst Eric Balchunas believed,
Source: Eric Balchunas/X
Seeing this huge move by Blackrock, firms like Grayscale and Bitwise have also been looking to list and trade options for their spot BTC ETFs. This follows the SEC’s approval of 11 spot BTC ETFs in January.
Amid the growing excitement, Jeff Park, head of alpha strategies at Bitwise, offered a different viewpoint of the situation, and stated,
“Things will likely get wild. In such scenarios, regulated markets may shut down. But the remarkable thing about Bitcoin is that there will always be a parallel, decentralized market that can’t be shut down, unlike GME—which, as you can imagine, will add even more fuel to the fire.”
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