According to a recent report by the investment firm Bernstein, the approval of a spot ETF will legitimize Bitcoin and other virtual currencies. In less than three years, the ETF's size could reach 10% of BTC's market capitalization, according to the report, which predicted an influx of institutional capital into the ecosystem.

ALSO READ:Stainless Games and Moxy Release Shock Rods

After a prolonged bear market, an injection of funds into the markets will result in a price rally across the entire cryptocurrency market.

The report concluded that the approval of one spot bitcoin ETF application by the U.S. Securities and Exchange Commission (SEC) would pave the way for additional applications, similar to the approval of a BTC futures-based ETF in 2021.

In addition to price fluctuations and institutional interest, a spot-based bitcoin ETF could alter the landscape of digital asset custody. Since the beginning of the year, there has been a surge in demand for institutional-grade custody solutions, resulting in a valuation of over $250 billion for the custody market.

ALSO READ:Hong Kong Urges HSBC And Standard Chartered To Accept Cryptocurrency Customers

According to a recent report by the investment firm Bernstein, the approval of a spot ETF will legitimize Bitcoin and other virtual currencies. In less than three years, the ETF's size could reach 10% of BTC's market capitalization, according to the report, which predicted an influx of institutional capital into the ecosystem.

After a prolonged bear market, an injection of funds into the markets will result in a price rally across the entire cryptocurrency market.

The report concluded that the approval of one spot bitcoin ETF application by the U.S. Securities and Exchange Commission (SEC) would pave the way for additional applications, similar to the approval of a BTC futures-based ETF in 2021.

The SEC has been inundated with requests for approval to launch spot bitcoin ETFs from prominent Wall Street firms. After a series of regulatory back-and-forth, the SEC extended its review of Ark 21Shares' application for a second time, making this the second extension for the application.

With the interest of prominent global asset managers in Bitcoin (BTC) spot ETFs and potential mechanisms to resolve the objections of the U.S. Securities and Exchange Commission (SEC), the likelihood of approval has increased, according to the report.

Several theorists cite the cascading effects of Canada's Purpose Bitcoin ETF, which amassed assets worth over $400 million in less than 48 hours after its inception. While the United States adopts a cautious approach, experts predict that Southeast Asia will be the next region to launch a spot BTC ETF.

Consequences of a spot ETF

Critics have cautioned that offering a spot Bitcoin ETF has several drawbacks, despite its many advantages. The inability of investors to retract the fundamental instruments is perhaps the greatest drawback, as it contradicts the Web 3 ethos.

ALSO READ:TRON Is Making Progress, But Risks Being Rejected At $0.074

A further disadvantage is the lack of uniform BTC prices, which could create numerous arbitrage opportunities. The SEC continues to be wary of existing custody solutions and bases its refusal to approve on insufficient investor protection safeguards.