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

Months after the EU got its first Bitcoin ETF, the U.S. joins the game and one EU analyst speculates the market access it could open up, along with a potential kick off to a bull market.

Both the traditional finance (TradFi) and decentralized finance (DeFi) spaces have been buzzing with anticipation around the decision from the United States Securities and Exchange Commission (SEC) to approve the country’s first spot Bitcoin (BTC) exchange-traded funds (ETF). 

The historic decision brings with it curiosity about its effects on the markets and, of course, on Bitcoin (BTC) itself.

However, across the pond in Europe, the excitement of a Bitcoin ETF has already dulled, as the continent saw its own Bitcoin ETF introduced on Aug. 15, 2023.

The First EU spot Bitcoin ETF hit the Euronext Amsterdam stock exchange over a year after its initial planned launch. It was issued by the London-based Jacobi Asset Management as the Jacobi FT Wilshire Bitcoin ETF.

The Jacobi Bitcoin ETF was touted as the first physical-backed Bitcoin (BTC) fund, exposing investors to a financial product backed by BTC. It was also classed as “environmental investing” or an Article 8 fund, which is those that “promote environmental and/or social characteristics.”

As the U.S. steps up to the plate Grzegorz Drozdz, the market analyst for the EU-based financial services platform Conotoxia, spoke with Cointelegraph about the U.S. spot Bitcoin ETF’s implications on the market, particularly from an EU perspective.

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

“Currently, however, 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, “this means that existing investment funds in this sector account for only 2.9% of the total value of crypto.”

Related: Bitcoin ETF approval ‘rehearsal’ favored sell-the-news reaction — Analyst

In terms of the EU specifically, he said, the European Economic Area “appears” to be more open to institutional investment in crypto with the launch of its Bitcoin ETFs, “the introduction of such funds in Europe does not yet seem to be generating significant inflows from institutions.”

“At the moment, market expectations are mainly focused on the approval of such instruments in the US, which could potentially influence the long-term development of the crypto world.

However, Drozdz forecasts difficulty in accurately gauging the scale of capital ready to invest in this market with financial products that “account for only 2.9% of capitalization.”

Overall, he points to the “rapid increase” of the inflow of new funds that the Bitcoin ETF can bring from institutions and investors as something to be noted. Drozdz said this could even suggest the start of a new bull market.

He is not the first to speculate the potential beginning of a new bull market run, as analysts and social media communities have been garnering similar sentiments in the lead up to the SEC decision.

“Considering that bitcoin still accounts for as much as 53.7% of the market’s capitalisation,” Drozdz said, “the success of this cryptocurrency could have a significant impact on the rest of digital currencies.”