The Battle of the Giants: Who Will Prevail in the Spot Bitcoin ETF Race?
TechFlow Selected TechFlow Selected
The Battle of the Giants: Who Will Prevail in the Spot Bitcoin ETF Race?
As the "top story" in the crypto market at the start of 2024, the final approval decision on spot Bitcoin ETFs will capture the attention of countless investors. Let's wait and see what unfolds on January 10!
Navigating Web3 tides with focused insightsAuthor: Metaer, Contributing Writer at Meta Era
At 8:00 PM on January 3, Bitcoin's price dropped sharply, falling below $44,000, then $43,000, and further down to $42,000. According to Coinglass data, within just one hour, more than 170,000 positions were liquidated across the market, with total liquidation reaching $613 million (approximately RMB 4.38 billion). Such a massive scale of liquidations can only be described as a "bloodbath."
The crypto community suspects this market downturn may be linked to a report published by Matrixport—founded by Jihan Wu—titled "Why the SEC Will Reject Spot BTC ETFs Again." The report stated that the U.S. Securities and Exchange Commission (SEC) would reject all spot Bitcoin ETF applications in January, with final approvals potentially not arriving until the second quarter of 2024. It also predicted Bitcoin’s price could fall to between $36,000 and $38,000, advising investors to buy put options.
This incident has revealed to the cryptocurrency community just how significant the impact of spot Bitcoin ETFs truly is. In fact, so far at least 12 institutions have submitted applications to the SEC. As the approval deadline approaches, intense market attention has focused on who will emerge victorious in what is arguably the most competitive race of 2024. This article by Meta Era offers an in-depth analysis.
Spot Bitcoin ETF Landscape: Ark Invest Might Fire the First Shot
As shown in the table above, the current applicants for spot Bitcoin ETFs with the SEC are all financial giants. BlackRock and Franklin Templeton need no introduction—they are among the world’s largest asset management firms. Grayscale is currently the largest digital asset manager globally, while Ark Invest and 21Shares are also well-known names in the industry.
It is no exaggeration to say the spot Bitcoin ETF space is already crowded. However, the most symbolically significant product is likely the "ARK 21Shares Bitcoin ETF" launched by 21Shares and Ark Invest. This ETF is set to be the first spot Bitcoin ETF requiring an SEC decision in 2024, meaning the SEC must decide whether to approve or reject it by January 10.
If Ark Invest and 21Shares succeed in setting a positive precedent for spot Bitcoin ETFs in 2024, subsequent similar applications are likely to follow smoothly. Conversely, if the SEC rejects their application, the crypto market could face another major shock. As China Securities Journal noted, recent expectations of imminent approval for spot Bitcoin ETFs in the U.S., combined with growing anticipation of Fed rate cuts, have fueled investor enthusiasm and driven up Bitcoin prices. However, the sharp decline on the evening of January 3 might reflect profit-taking due to the prior rapid price surge.
That said, at present, the likelihood of the SEC postponing or rejecting spot Bitcoin ETFs appears relatively low. The SEC has previously held multiple meetings with Nasdaq, the Chicago Board Options Exchange, and the NYSE to finalize comments on the 19b-4 filings submitted by ETF issuers. Moreover, they’ve engaged directly with applicants offline to refine their 19b-4 submissions, rather than forcing repeated re-filings of S-1 forms as in the past.
However, caution remains warranted. Despite prevailing market optimism about the approval of spot Bitcoin ETFs, “the SEC is unpredictable.” Some voices in the market still believe the regulator won’t give the green light yet. For example, Joy Lou, co-founder of LD Capital, commented: "I don't think it will pass, and BTC price won't fluctuate much." So, if the worst-case scenario unfolds—the U.S. regulator rejects spot Bitcoin ETF applications—is there any other path forward?
Not necessarily—
A New Dawn for Spot Virtual Asset ETFs: Hong Kong!
On December 22, the Securities and Futures Commission (SFC) of Hong Kong issued two circulars: the "Circular on SFC-authorized Funds Investing in Virtual Assets" and the "Joint Circular on Virtual Asset-related Activities of Intermediaries," effectively giving the virtual asset ETF market an early "New Year" celebration.
In the "Circular on SFC-authorized Funds Investing in Virtual Assets," the Hong Kong SFC confirmed it recognizes spot virtual asset ETFs. Participating dealers (PDs) may transfer spot virtual assets held locally or overseas into SFC-authorized spot virtual asset ETFs, and subscriptions and redemptions can be conducted in-kind or in cash via SFC-approved virtual asset trading platforms or recognized institutions (or their subsidiaries).
Moreover, the Hong Kong SFC stated it is ready to accept authorization applications for spot virtual asset ETFs, positioning Hong Kong to become Asia’s first market to list spot ETFs for Bitcoin, Ethereum, and other virtual assets. Hong Kong Exchanges and Clearing (HKEX) responded proactively, saying it is prepared to seize thematic investment opportunities and will work closely with issuers and stakeholders to smoothly introduce these new products. This move aims to establish Hong Kong as Asia’s first market allowing spot virtual asset ETF listings, strengthening its position as a leading regional digital asset hub and supporting its continued development as Asia’s preferred ETF marketplace.
Who Will Win the Fiercest Spot Bitcoin ETF Race of 2024?
The importance of spot Bitcoin ETFs lies primarily in their ability to rapidly inject liquidity into the market. "Spot" means ETF issuers must acquire underlying BTC assets through exchanges, OTC desks, or miners, thereby stimulating liquidity in the spot market. In the crypto industry, after all, “he who controls liquidity rules the market.” Furthermore, ETFs expand the base of crypto traders, leading to higher trading volumes and a more efficient market. Market makers also benefit from ETFs by using them as hedging tools, possibly expanding their operations. Increased trader participation is expected to improve overall market conditions.
From a product standpoint, the "ARK 21Shares Bitcoin ETF" by 21Shares and Ark Invest carries strong signaling significance and is currently the most likely candidate for approval. Many may not know that Ark Invest partnered with Swiss-based crypto ETP issuer 21Shares as early as 2021 to launch this ETF, submitting its spot Bitcoin ETF application back in May 2022—making it a true pioneer in this field. If approved, it would undoubtedly deliver a powerful boost to the entire market.
From a market perspective, perhaps the U.S. isn’t the optimal choice for launching spot Bitcoin ETFs. Instead, Hong Kong holds significant advantages in winning this 2024 race—
First, Hong Kong has a large pool of investors interested in cryptocurrencies, and local market liquidity is strong. HKEX already hosts several crypto-related products, including Bitcoin futures ETFs and Bitcoin options ETFs. In contrast, the U.S. currently has no listed Bitcoin or Ethereum ETFs.
Second, Hong Kong’s regulatory environment is relatively friendly toward cryptocurrencies. The Hong Kong SFC treats cryptocurrencies as "virtual assets" and released a regulatory framework for virtual asset trading platforms in June 2022. This framework provides compliant pathways for crypto exchanges while offering necessary investor protections. In contrast, the U.S. has yet to reach consensus on crypto regulation. The SEC has consistently rejected spot Bitcoin ETFs, citing risks of market manipulation and fraud. With regulatory barriers now removed, launching a spot Bitcoin ETF in Hong Kong is truly "all systems go"—once minor technical details are resolved, Asia’s first spot Bitcoin ETF could soon emerge.
Overall, as the top story in the crypto market to kick off 2024, the final decision on spot Bitcoin ETFs will capture the attention of countless investors. On January 10, we’ll find out—stay tuned!
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
