New Bitcoin ETFs “democratize market access,” says EU analyst

Both the traditional finance (TradFi) and decentralized finance (DeFi) spaces have been eagerly anticipating the United States Securities and Exchange Commission's (SEC) decision to approve the country's first Bitcoin (BTC) exchange-traded fund (ETF). .

The historic decision will bring excitement about the impact on the markets and of course on Bitcoin itself.

However, across the pond in Europe, the continent introduced its first Bitcoin ETF on August 15, 2023, the Bitcoin ETF excitement has already faded.

The Jacobi FT Wilshire Bitcoin ETF has hit the Euronext Amsterdam stock exchange more than a year after its original planned launch. It was issued by London-based Jacobi Asset Management.

The Jacobi Bitcoin ETF is considered the first physically backed Bitcoin fund, exposing investors to a financial product backed by BTC. It is also classified as an Article 8 fund that “invests in the environment” or “promotes environmental and/or social characteristics”.

As the United States steps up, Grzegorz Drozd, market analyst at EU-based financial services platform Contoxia, spoke with Cointelegraph about the market impact of US spot Bitcoin ETFs, particularly from an EU perspective.

Drozdz commented that the general introduction of Bitcoin ETFs “going beyond traditional cryptocurrency exchanges and wallets” seems to have “significantly democratized” access to the market.

“But at the moment, their size is still small compared to the overall financial and crypto market.”

He pointed out that the global capitalization of the cryptocurrency market is 1.78 trillion dollars, “which means that the investment funds in this sector only account for 2.9% of the total value of crypto.”

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Regarding the European Union, especially the European Economic Area, with the launch of Bitcoin ETFs, institutional investment in crypto seems to be more open, he said. However, he added, “the launch of such funds in Europe does not yet appear to generate significant returns from institutions.”

“At the moment, market expectations are mainly focused on the approval of such devices in the US, which may affect the long-term development of the crypto world.”

However, Drozdz predicts that it is difficult to accurately measure the amount of capital ready to invest in this market with financial products, which “account for only 2.9 percent of capitalization.”

Overall, the Bitcoin ETF points to a “rapid increase” in potential new cash flows from institutions and investors. Drozdz said this could also signal the start of a new bull market.

It's not the first time analysts and social media communities have shared similar sentiments in the lead-up to the SEC's decision to speculate that it could be the start of a new bull market run.

“Given that Bitcoin still accounts for 53.7% of the market capitalization, the success of this cryptocurrency can have a significant impact on the rest of the digital currencies,” said Drozdz.

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