The cryptocurrency community is excitedly anticipating the approval of a Bitcoin exchange-traded fund (ETF) in the US, but some analysts are cautioning that this could have unfavorable effects on cryptocurrency exchanges.
When combined with Bitcoin's impending block reward halving, which is anticipated in April, as predicted by a number of industry observers, a spot BTC ETF could begin trading in early 2024, which Blockstream CEO Adam Back believes could push BTC to $100,000.
Supporters of bitcoin, like Samson Mow, CEO of Jan3, have predicted that in the "days to weeks" that follow the U.S. approval of a spot Bitcoin ETF, the price of bitcoin will rise as high as $1 million.
However, according to Bloomberg ETF analyst Eric Balchunas and president of ETF Store Nate Geraci, the outlook for centralized cryptocurrency exchanges isn't all that bright.
On December 17, Geraci said on X (previously Twitter) that a possible spot Bitcoin ETF in the United States would be a “bloodbath” for cryptocurrency exchanges if allowed.
Retail spot Bitcoin ETF buyers and sellers will profit from institutional trade execution and commissions, claims Geraci. However, Geraci emphasized that in order to compete with a spot Bitcoin ETF, "retail trade execution and commissions"—which are what regular users of cryptocurrency exchanges will receive—will need to be improved.
Eric Balchunas, an ETF analyst at Bloomberg, said that the typical trading charge for an ETF is 0.01%, which is what a spot Bitcoin ETF will cost to trade.
Conversely, trading fees on platforms like as Coinbase might exceed 0.6%, contingent upon the cryptocurrency, transaction volume, and trading pair selection.
