Bitcoin ETF: Will Coal ETF Debut Damage Bitcoin’s Shine?

The green signal for Bitcoin ETFs took the entire market by storm. After waiting for over a decade, the SEC gave a nod for Spot Bitcoin ETFs to trade on Wall Street. But with the debut of new ETFs every day, investors are grappling with the thought of Bitcoin ETFs losing ground.

Range debuts new Coal ETFs

Range ETFs commenced trading of four new ETFs on Wednesday. The catch behind these ETFs is that they are energy-related ETFs. This new addition to Range’s roster includes nuclear, coal, natural gas, and oil services sectors.

The debut of these energy-related ETFs comes at a time when the hype around them is high. The clean energy sector is seeing a rush of investment, supporting regulations boosting new projects, and buzz around sustainable businesses.

However, in 2023, clean energy stock index funds have generally declined. Last year,  the iShares Global Clean Energy ETF and the S&P Global Clean Energy ETF dropped by more than 30% In the meantime, firms like SolarEdge and Enphase Energy have experienced declines of 73% and 67%, respectively.

Will the new Energy ETF affect Bitcoin ETF?

With an ever-expanding market, ETFs provide investors with a wider choice of slightly safer investing.  ETFs can provide improved tax efficiency in taxable accounts, increased transparency, and reduced operational expenses than conventional open-end funds.

The Bitcoin ETF approval also came on the back of making trading in Bitcoin more efficient and easier for investors. According to a CNBC article, the Bitcoin ETF approval has made it easier than ever for investors in more conventional assets, like stocks and bonds, to explore the world of cryptocurrencies. Bitcoin investors who purchase exchange-traded funds (ETFs) can retain their bitcoin in their brokerage accounts with their other investments, eliminating the need to maintain a separate account.

However, a large number of ETFs in the market can result in lesser investor traction towards Bitcoin ETFs. The energy-related ETFs will cater to a very different investor crowd than Bitcoin ETFs. But there is no doubt that many investors just ride the “newborn” hype in terms of investing in new trends. But so far, apart from the sentiment, other ETFs won’t directly have any impact on Bitcoin ETFs.

Bloomberg analyst Eric Balchunas in an X post called the energy ETF’s timing “comes as ESG launches are all but extinct”.

According to a report published in October 2023 by Galaxy Digital, Bitcoin ETFs could attract over $14 billion in investor inflows during its first year on the market. The same report suggested that Bitcoin ETFs could see a 74% price increase during that time.

The post-Bitcoin ETF approval market

Since January 11, when the first ETFs directly invested in bitcoin were introduced, the price of bitcoin has dropped by around 20%. The digital asset shot up to $49,021 on the day the ETFs were introduced. But earlier in trading, the price of Bitcoin was $39,718—a 19% drop from its peak that day. At the time of writing, Bitcoin was trading at $40,038, a nearly 2% rise in the past 24 hours.

Currently trading between $43,000 and $40,000, Bitcoin is going through a consolidation phase. The phase is impacted by selling related to ETFs. Given that the next halving is anticipated on April 7, 2024, historical trends point to the possibility of a big correction before setting up a powerful rally.