As the crypto world eagerly anticipates the U.S. Securities and Exchange Commission’s (SEC) verdict on Bitcoin exchange-traded funds (ETFs), Bloomberg’s senior ETF analyst Eric Balchunas is making an impactful prediction. In a sizzling recent episode of the “Unchained Crypto” podcast, Balchunas said that the advent of Bitcoin ETFs might be bad news for crypto exchanges like Coinbase which operate by charging high fees.
Why Is This a Big Deal?
Balchunas says that if Bitcoin ETFs get approved by the U.S. government, a lot of people will start buying them instead of actual Bitcoin. Why? Because it’s cheaper and simpler. This could mean less business for crypto exchanges that charge high fees for trading.
So, Are Exchanges in Trouble?
Maybe. Balchunas warns that crypto exchanges should watch out. Many of them charge really high fees, sometimes 1.5%, while a Bitcoin ETF might charge as low as 0.35%. People like saving money, so they might move to ETFs if they can.
While the situation appears grim, it’s not all doom and gloom for exchanges. The rise of Bitcoin ETFs could also signal a lucrative shift towards custody service fees. After all, those investment firms rolling out ETFs aren’t exactly planning to stash their Bitcoin under a digital mattress.
Public Sentiment: An Uphill Battle for ETF Acceptance?
Balchunas may be bullish on the prospects of Bitcoin ETFs, but he faces stiff opposition. Numerous social media users have countered, claiming decentralized exchanges won’t just roll over and play dead. These platforms cater to a different risk profile, one that may not be easily wooed by the allure of ETFs.
The ticking clock of the U.S. Securities and Exchange Commission’s upcoming decision on Bitcoin ETFs adds another layer of suspense. Following a court ruling that deemed the SEC was incorrect in rejecting Grayscale’s Bitcoin ETF application, Balchunas and his colleagues are raising their bets. They now see a whopping 75% chance of spot Bitcoin ETFs launching this year.
As we await the SEC’s decision, scheduled for mid-October, the future of cryptocurrency exchanges hangs in the balance. Will ETFs be the meteor that causes an extinction-level event for high-fee crypto exchanges, or just another evolutionary pressure in the rapidly adapting world of crypto? Only time will tell!