Bitcoin ETF: How US Election Could Shape The Future Of ETF Market?

The United States elections could have a huge impact on spot Bitcoin ETFs adding to already notched gains in the market. For most of the year, these exchange-traded funds dominated market narratives as they opened up a new investment window for traditional firms leading to massive inflows in the sector. The price of the asset and the general market have been impacted by ETFs with assets tapping a wider adoption. 

The long run to spot Bitcoin ETF approval saw the Securities and Exchange Commission (SEC) reject several attempts citing possible market manipulation among stakeholders and investors. This sparked a wider criticism and deepened the existing battle between the financial regulator and crypto firms. As a result, crypto-friendly firms sued the Commission leading to eventual action by the SEC. The landmark Grayscale judgment remains pivotal to the approval of ETFs. These funds have led to a new state in the crypto market from adoption to investments and innovation. 

Impact of US Elections on Spot Bitcoin ETFs

For most users, the biggest impact of crypto ETFs is the added legitimacy it ushered into the space. On the other hand, a cross-section of users say its major impact is on inflows to the markets. Whatever the case may be, upcoming US Presidential elections will affect both narratives. Seen as a potential uphill driver of the market should pro-crypto candidates get elected, the winner of the Presidential seat will determine the general market sentiments. 

On one hand, former President Donald Trump who has gained the blessings of many within the space termed the ’crypto President.’ Trump has courted Bitcoin supporters making pro-industry statements and assuring institutional investors that his administration will not go to war with the asset. This is tipped as a great start and a narrative pushed by crypto enthusiasts that will see the asset smash its $73,000 all-time high. At the moment, Bitcoin ETFs have attracted over $50 billion in a few months, and with the 11 funds projects to draw more funds from traditional investors. 

In a nutshell, Donald Trump’s victory in November will on the surface mean a positive situation in the White House which could clear up regulatory hurdles for the next phase of adoption. 

Kamala Harris Uncertain Policies

Kamala Harris stance on the market remains dicey as many project a continuation of President Joe Biden’s policies and loggerheads with the markets. The present administration has been criticized for rejecting pro-crypto regulatory efforts with the regulators giving crypto firms a hard time by stalling ETF approvals coupled with the SEC filing lawsuits. However, some crypto stakeholders in Kamala Harris’s camp suggest that she might take a different approach to Biden although her policies towards the sectors are not yet crystal clear.

Although a Trump win will rally the crypto market and spike investors’ confidence to spot Bitcoin ETFs, the sector is still poised to grow either way. The success of these products amid unclear regulatory frameworks is a sign of things to come in a space without regulatory bottlenecks. The US elections have also seen lawmakers take a bipartisan approach to crypto legislation.

How Funds Have Performed So Far

By far, spot Bitcoin ETFs dominated financial market narratives this year leading to investments and adoption. With over $17 billion in net inflows, spot BTC funds are the most successful ETFs. Aside from figures, these products also topped traditional products in terms of institutional holders. 

In the last eight months, these funds have amassed 1,100 institutional holders, far above other products. Leading in inflows and mainstream adoption, the successes of these products ushered in applications for other crypto ETFs. The SEC gave the green light to spot Ethereum ETFs with investors rallying for the funds and signaling Solana ETFs as the next fund to get approved. However, Solana ETF chances seem slim at the moment due to a lack of regulated futures markets. 

Bitcoin price has jumped due to the inflows of approved ETFs. In Q1 2024, the price of the market leader soared above $73k. Although present crypto market corrections saw the price drop below $60k, the impacts of traditional investors remain pivotal to the upward projections. VanEck estimated a price surge to $2.9 million per asset by 2050 on the back of institutional adoption. Other firms and stakeholders previously posted to $100k price towards the end of the year.