Bitcoin ETF Listed on US Stock Market... Institutional Inclusion After 8 Years of Application

Market Expansion and Reduced Volatility Expected... Anticipation of Safe Asset Role
Focus on Full-Scale Regulation Start... Potential for Price Decline

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Bitcoin futures exchange-traded funds (ETFs) are now traded on the U.S. stock market. This marks the institutional inclusion about eight years after the first Bitcoin ETF application in 2013. We examined how the inclusion of Bitcoin futures ETFs in the institutional framework will change the cryptocurrency market, including Bitcoin.

Difference Between ETF and Bitcoin Trading

Currently, Bitcoin can be traded by joining a cryptocurrency exchange or by creating a cryptocurrency wallet directly. Creating a wallet and joining a cryptocurrency exchange require procedures such as real-name account verification and customer identification systems, which are somewhat unfamiliar to general investors.

Trading Bitcoin futures ETFs is the same as trading regular ETFs. If you have a stock account, you can immediately purchase Bitcoin futures ETFs. Simply search for ProShares' Bitcoin futures ETF code name ‘BITO’ and buy it using the dollars you hold.

However, management fees are expected to be set higher than those of existing ETFs. Bloomberg Intelligence, a research arm of Bloomberg, predicted that the annual management fee for Bitcoin futures ETFs will exceed 1%. ProShares' Bitcoin futures ETF has a fee set at 0.95%. In comparison, the fee for the U.S. ETF ‘QQQ’, which is the most purchased by domestic investors, is only 0.20%.

Will the Market Size Grow Larger?

The current asset size of the U.S. ETF market reaches $6.8 trillion (8058 trillion KRW). Industry experts expect that even if only a portion of this is drawn into the cryptocurrency market, the market size will expand further. According to the cryptocurrency market data site CoinMarketCap, as of this date, Bitcoin's market capitalization is $1.16 trillion.

Moreover, it is expected that a wider variety of investors will participate in the market. Large investors who had been reluctant to enter the cryptocurrency market due to its exclusion from the institutional framework and high volatility now have a relatively safer way to invest. An industry insider explained, "With recognition from U.S. financial authorities, institutional investors' participation will become more active," adding, "As ETFs that gather only companies holding Bitcoin have recently been launched, the scope of cryptocurrency's application in actual economic activities is also expanding."

Possibility of Reduced Volatility... Will Investment Appeal Be Maintained?

[Image source=Reuters Yonhap News]

Since Bitcoin-related ETFs have been launched for the first time on the U.S. stock market, their influence on Bitcoin is expected to be significant. In particular, the volatility, which has been pointed out as a drawback of cryptocurrencies, is expected to decrease, allowing Bitcoin to serve as a safe asset.

However, there is also an analysis that paradoxically, if volatility decreases, the investment appeal may diminish. Professor Lee Byung-wook of Seoul School of Integrated Sciences and Technologies explained, "As it gets closer to the institutional framework, volatility inevitably decreases, and most cryptocurrency investors are targeting volatility," adding, "The ETF launch acting as a positive factor is somewhat contradictory."

It Could Rather Be a Signal of Stronger U.S. Financial Regulatory Measures

Stronger regulations are also expected. While U.S. financial authorities mentioned the possibility of launching Bitcoin ETFs, they have consistently indicated regulations focused on cryptocurrency crimes and stablecoins linked to the value of legal tender such as the dollar. If regulations begin in earnest, a decline in Bitcoin prices will be inevitable.

Professor Hong Ki-hoon of Hongik University’s Department of Business Administration emphasized, "Although ETFs are not direct investments, regulations will inevitably become stronger," adding, "Approving ETFs is a signal that regulations will be enforced in earnest."

This content was produced with the assistance of AI translation services.