Impact of Spot Bitcoin ETFs on NFTs
By Ruchi Sharma
As NFTs and other cryptocurrencies gain popularity, job opportunities change. This location will attract skilled writers, engineers, designers, and leaders because cryptocurrency is dependable.
The entire cryptocurrency community has been anticipating news from the U.S. Securities and Exchange Commission regarding the approval of a Bitcoin spot exchange-traded fund since the autumn of 2023.
The approval of spot bitcoin ETFs by U.S. regulators comes after a protracted wait. This is a significant move for the digital asset market, as it is anticipated to expand investment options for investors, especially institutional investors, and grow the investor base for the venerable cryptocurrency.
Now that the BTC ETF has received approval, it is important to consider the potential implications for those of us who operate in the NFT community daily. What is it, how might it affect us, and how can we prepare?
What is a Spot ETF?
To put it simply, a Spot ETF is a fund that purchases and sells an asset “on the spot” at its current price in the regular, regulated market. With Bitcoin, investors can now directly accomplish that.
The institutional organization managing a Spot Bitcoin ETF will keep Bitcoins in a digital wallet. To ensure the protection of the Bitcoins in these virtual safes, several security measures, including offline and online storage, will be implemented.
The ETF uses conventional stock exchanges to issue shares to the retail market in proportion to the quantity of Bitcoins it owns. The ETF aims to accurately replicate the price of the cryptocurrency, ensuring that investors are exposed to the fluctuations in Bitcoin’s price. The organization in charge of the ETF bears exclusive responsibility for the custody of Bitcoins.
What happens once the ETF trades?
After an ETF is approved, the cryptocurrency markets’ recent upswing has been driven by the belief that the price of bitcoin will soar. Demand will soar and prices will rise once large institutions and regular investors can purchase native Bitcoin at that day’s rates.
However, this isn’t always the case. The large investors who have pushed up the price of Bitcoin must pocket some of the gains. The adage goes, “Buy the rumor, sell the news.”.
It will depend on how big of a demand the traditional market has for the ETF; based on spot ETF offerings for other assets, that interest may be as large as tens of billions of dollars or considerably smaller. The price of bitcoin plunged into a severe bear market a month after the launch of bitcoin futures ETFs, which saw the currency rise to $69,000 in the first few days.
Therefore, while the permission announcement may not guarantee that we will enter Valhalla, the essentials are certainly cause for excitement. Investors can purchase the goods with ease thanks to Bitcoin spot ETFs, just like they can obtain Apple shares.
To a novice investor in cryptocurrency, there are no seed words, hardware wallets, dubious exchanges, or hackers to worry about—just profit and loss. Whether the “number goes up” right away or not, an authorized and traded BTC spot ETF facilitates the easy entry of liquidity into the market going forward.
What About NFTs?
Will that cash come into NFT land for us? A shift in spending that corresponds with a shift in perceived affluence is known as the wealth effect. The desire for Bitcoin increases the owner’s sense of wealth. A rapid outcome might be an expansion of the digital collectibles marketplace.
In fact, even if a lot of Bitcoiners despise Ordinals, their current popularity may have something to do with the hype surrounding the ETF. Larger investors may be more willing to take on risk and have greater resources; thus, they may make larger investments in web3-related businesses and creators who show promise.
This is the reason it focuses on ordinals. Short-term volatility is probably going to result from the approval of BTC ETFs, which has never been good for NFTs. If Bitcoin moves too sharply in either direction, this can have a short-term effect on the Ordinals market.
However, in the medium to long run, all of the additional focus and attention can only benefit the NFT ecosystem on Bitcoin. Artist, collector, podcaster, and CryptoPunk owner OG_crookedwest discussed his predictions for the BTC ETF’s potential outcomes with NFT Now. He said, “I see a somewhat mixed but generally positive outcome for NFTs if the ETF is approved.”
“I think [an approval] is super bullish for Layer 1 [chains], and on NFTs, I think positive but mixed impact,” he told NFT now. “I think it helps Layer 1 and helps the very best artists and projects but will result in further concentration on fewer projects and artists,” he said.
“I don’t see a close link between the ETF and the NFT space,” Ledger Chief Experience Officer Ian Rogers stated in an interview with NFT Now.
A cultural impact is yet another possible outcome. Cryptocurrency may gain legitimacy and attention when Bitcoin becomes attractive and accessible. As the industry is currently under political attack and still recovering from the harm caused by scammers like Sam Bankman-Fried, it is crucial for cryptocurrency to gain legitimacy and attention.
The gradual increase in legitimacy has a significant impact: individuals considering career paths now take the cryptocurrency space—including NFTs—into account. Because people regard cryptocurrency as credible, talented storytellers, engineers, designers, and leaders will enter this space.
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