Would Record Bitcoin High Have Happened Without Spot ETFs?

Bitcoin (BTC) set a new record high, surpassing $69,000 on Tuesday, a milestone that came just two months following the approval and introduction of ten spot bitcoin ETFs. This rapid development has sparked debate on whether the ETFs were a pivotal factor in achieving this new peak so swiftly. Seth Ginns, a managing partner and head of liquid investments at CoinFund, opined that while the ETFs weren’t essential for reaching the new high, they undoubtedly hastened the process. Despite Grayscale’s GBTC seeing a reduction of over 200,000 in its bitcoin holdings since the ETFs were introduced in January, the spot funds have collectively added nearly 163,000 tokens, as per BitMEX data, with BlackRock’s IBIT and Fidelity’s FBTC together holding over 196,000 bitcoins.

Jim Iuorio, managing director of TJM Institutional Services and an experienced futures and options trader, asserted that the ETFs significantly contributed to reaching the all-time highs. He attributed the rally not solely to the ETFs but also to the current political climate, including expectations of the U.S. Federal Reserve cutting benchmark interest rates and the cessation of the Bank Term Funding Program, which was designed to prevent a potential banking crisis in 2023.

Iuorio described the increased interest in all cryptocurrencies as a reflection of diminished confidence in the management of fiat currencies and speculated about the Federal Reserve possibly resuming quantitative easing and other supportive policies. The bitcoin price, which has seen a roughly 50% increase since the ETFs were launched in January and nearly tripled in 2023 following BlackRock’s announcement of a spot fund and Grayscale’s legal victory against the SEC’s rejection of its spot ETF, is influenced by multiple factors. However, ETFs have significantly impacted by facilitating access for retail investors, advisors, and institutional investors who preferred not to deal with cryptocurrency exchanges directly, according to Nate Geraci, president of the ETF Store.