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Can BlackRock’s Bitcoin ETF Push BTC Price to New All-Time High of $150,000? This is How BTC Spot ETFs Work – Deep Dive

John KumiBy 0Edited by John Kiguru 15. January 20243 Mins Read
  • The first day of trading following the approval of the 11 spot Bitcoin ETFs saw an inflow of about $721 million.
  • Some crypto analysts have predicted that the Bitcoin price could surge to $150,000. 

Recently, the US Securities and Exchange Commission (SEC) approved its first-ever spot Bitcoin Exchange-Traded Fund (ETF) after subjecting previous applications to rejections. The hype around the approval had an immediate impact on the crypto prices as billions of dollars are expected to enter the market from mainstream investors. Interestingly, Google search results on spot BTC ETF keep rising as crypto enthusiasts search for how it works. 

How the Spot-Based ETF Works

Firstly, experts explain that the spot Bitcoin ETF is a fund that holds BTC for investors. The word “spot” in this context means that it holds actual BTC rather than derivatives tied to the Bitcoin price. These Bitcoin ETFs are also said to be trusts that ensure that pools of BTC are managed.

Market makers, for instance, are known to be buying and selling shares constantly. According to experts, market makers ensure that the price of a Bitcoin is tracked by ETFs by capturing tiny discrepancies between what the Bitcoin price should be and the price of the ETF shares. 

More on the Spot Bitcoin ETF 

For now, authorized participants of the spot Bitcoin ETF are Jane Street Capital, Virtu Financial, and the U.S. brokerage arm of JPMorgan Chase. What they do is they provide cash to the trust to meet the rising demand in return for a new basket of shares created by the trusts. In this case, the ETF shares get expanded. The trust also adds to its Bitcoin holdings, so when more investors enter, the pool of BTC grows.

However, the pool of Bitcoin decreases when investors dump the asset. The authorized participants would send their shares to the trust for cash, reducing the supply of the shares while the trust also reduces the supply of its BTC holdings. 

According to Bloomberg ETF expert Eric Balchunas, Bitwise’s Bitcoin ETF (BITB) attracted $238 million in inflows on the first day of trading. Fidelity’s ETF (FBTC) came second with $227 million of inflows. BlackRock’s IBIT came third with $111.7 million of inflows. Balchunas disclosed that the total inflows amounted to around $721 million. 

Some experts have predicted that the impact of the ETF approval could send the Bitcoin price to $150,000. To take advantage of this, Anthony Scaramucci, founder of SkyBridge Capital, claims to be increasing exposure to Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and other altcoins.

I think this is a really big breakthrough for Bitcoin as a digital asset, it’s a much broader story for digital property in general. I think Bitcoin will probably see its all-time high at the end of the year and is likely to go through its all-time high by the end of the year.

As of press time, BTC and the broader market were moving down the price curve. BTC is currently down by 7% in the last 24 hours, trading at $42,741.99. The asset also has a market cap of $836,626,424,166. 

 

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This article is provided for informational purposes only and is not intended as investment advice. The content does not constitute a recommendation to buy, sell, or hold any securities or financial instruments. Readers should conduct their own research and consult with financial advisors before making investment decisions. The information presented may not be current and could become outdated.

John is a seasoned cryptocurrency and blockchain writer and researcher, boasting an extensive track record of years immersed in the ever-evolving digital frontier. With a profound interest in the dynamic landscape of emerging startups, tokens, and the intricate interplay of demand and supply within the crypto realm, John brings a wealth of knowledge to the table. His academic background is marked by a Bachelor's degree in Geography and Economics, a unique blend that has equipped him with a multifaceted perspective. This diverse educational foundation allows John to dissect the geographical and economic factors influencing the cryptocurrency market, offering insights that go beyond the surface. John's dedication to the crypto and blockchain space is not merely professional but also personal, as he possesses a genuine passion for the technologies that underpin this revolutionary industry. With his astute research skills and commitment to staying at the forefront of industry trends, John is a trusted voice in the world of cryptocurrencies, helping readers navigate the complex and rapidly changing terrain of digital assets and blockchain innovation. John Kiguru is an accomplished editor with a strong affinity for all things blockchain and crypto. Leveraging his editorial expertise, he brings clarity and coherence to complex topics within the decentralized technology sphere. With a meticulous approach, John refines and enhances content, ensuring that each piece resonates with the audience. John earned his Bachelor's degree in Business, Management, Marketing, and Related Support Services from the University of Nairobi. His academic background enriches his ability to grasp and communicate intricate concepts within the blockchain and cryptocurrency space. Business Email: info@crypto-news-flash.com Phone: +49 160 92211628

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