Crypto Crystal Ball 2024: Will a Bitcoin ETF Be a Game-Changer?

By all accounts, crypto is at a crossroads. Across markets, the legal and regulatory landscape, and the Web3 startup ecosystem, there’s little disagreement among industry leaders that 2024 could shape up to be one of crypto’s most consequential years yet. Whether those events will finally lift the industry out of winter to new highs, or imperil it, remains another question.

But do not panic, dear reader. While nothing about the future can ever be certain—least of all when it comes to crypto—Decrypt has spoken to analysts across finance, policy, and the NFT space to peek behind the curtain.

First up: How much impact will a spot Bitcoin ETF really have?

It’s the topic on everybody’s minds: the ever-elusive, tantalizingly close, potentially transformational spot Bitcoin ETF. For years, the Securities and Exchange Commission (SEC) has prevented mainstream financial institutions from creating such a product—which would allow traditional investors and entities to gain exposure to Bitcoin without holding any cryptocurrency themselves. 

Once BlackRock entered the Bitcoin ETF race, though, all bets were off. It’s looking increasingly likely that the Wall Street behemoth will get its way, and some analysts have predicted the first spot Bitcoin ETF is most likely to gain approval in the second week of January. In anticipation of that event, BTC has pumped over 63% since October, breaking $44,000 last week.

But should one expect a spot Bitcoin ETF, if approved, to swoop in deus ex machina-style and flood crypto with limitless buckets of Wall Street cash? Not so fast, says John Palmer, president of spot crypto clearinghouse Cboe Digital. 

“I think it’s fantastic,” Palmer told Decrypt of the prospect of a spot Bitcoin ETF. “But how many new entrants will be there?”

“Obviously, there’ll be additional types of funds, pensions, retirement funds that are now willing to access the product,” Palmer continued. “But I believe that there’ll probably be some that aren’t, because it’s still Bitcoin. So I don’t think it will be an avalanche of flow.”

Palmer says a great expectation for the spot Bitcoin ETF market’s first year—if the product is approved in January—would be $10 billion to $15 billion worth of investment. While substantial, that figure pales in comparison to Bitcoin’s $859 billion market capitalization. 

Over time, Palmer believes, the integration of traditional finance into crypto markets could meaningfully impact crypto markets. But those expecting to enter a new reality come February should probably hold off on that Bugatti down payment.  

“It’s not going to be a light switch,” he said.

Crypto Crystal Ball is a series examining the hottest industry topics ahead in 2024. Stay tuned for additional perspectives in the coming days.

Edited by Andrew Hayward