Evaluation: what will REALLY happen to the Bitcoin market if an ETF is approved?

A Bitcoin ETF has long been denied to US investors. Recently, countries like Canada and Brazil have authorized BTC and ETH ETFs. Still, the SEC continues to refrain from doing so in the United States. 

However, some optimism has grown significantly in recent weeks after SEC Chairman Gary Gensler's comments at the Aspen Security Forum. Gensler discussed cryptocurrencies in detail and one of his comments was:

"Given these important protections, I look forward to staff review of these documents, particularly if they are limited to these CME traded Bitcoin futures."

Now, many have speculated that this was an indirect hint to Wall Street about the type of Bitcoin ETF the SEC would be willing to accept. A futures-based ETF with no direct exposure to spot markets.

Hypothetically, let's assume a Bitcoin ETF becomes official by the end of the year. How will the Bitcoin market react after approval?

A path like gold or even better?

In order to draw a realistic comparison, the gold case study can be taken as a reference for addressing a possible path for Bitcoin after the launch of the ETF. The first gold ETF was approved in Australia in 2003, following which the SEC approved one in 2004, starting trading in November 2004.

Now, between an annual low in 2001, to just before ETF approval in 2004, the value of gold has risen by 76%. However, soon after the ETF's approval, the market started to tilt sideways and fell 9% in one month.

It was nearly a year later that the impact of the ETF was felt on the charts.

Over the next 5-6 years, gold experienced a parabolic rise, reaching a high of $ 1900 from $ 420 - $ 440. A direct increase of 330% since the gold ETF started trading.

According to the statistics, it was a clear division of assets. Gold was made easily accessible and a new institutional interest in the business emerged during the 2008 financial crisis. Gold was already considered a hedge against inflation. That was one of the best times to have invested in Gold.

How should Bitcoin react?

An official Bitcoin ETF will obviously improve the credibility of the digital asset as a legitimate and safe investment vehicle. If it emulates the "Gold like-for-like" race, BTC will be valued over $ 200.000 within the next 5 years (here the quotation in real time).

However, some difficulties may also arise. An SEC-regulated Bitcoin ETF could have a free weekend period. Right now, the trading desks for BTCC and EBIT are Monday through Friday. This is a problem when the BTC spot market is 24 × 7.

Any Bitcoin ETF would be subject to extraordinary volatility during off-market hours and investors will not be able to exit their positions during off-market hours.

To deal with such a scenario, a US ETF would have to offer round-the-clock trading on OTC exchanges. This will ensure that investors don't have a blind spot with these Bitcoin products.