Coinbase: forecasting the Bitcoin ETF approval



David Duong, head of institutional research at Coinbase, has released his forecasting of Bitcoin ETFs in the crypto market, saying they could add billions of dollars to the total. 

Not only that, Duong predicts that their approval by the U.S. SEC, is possible by the end of the year. 

Coinbase: forecasting the crypto market with approved Bitcoin ETFs

In a report “Monthly Outlook: Why an ETF Matters,” David Duong, head of institutional research at Coinbase, released his predictions on Bitcoin ETFs for the crypto market. 

Specifically, Duong argues that Exchange-Traded Funds (ETFs) on spot Bitcoin could add billions of dollars to the total cryptocurrency market. 

Hence, for Duong, this is a big opportunity for the crypto market to attract new classes of investors as well. In that regard, here are Duong’s words:

“Spot bitcoin exchange-traded funds (ETFs) have the potential to widen crypto access to a new class of investors, including registered investment advisors (RIAs), retirement funds and other institutions that have historically been precluded from this asset class.”

Not only that, Coinbase’s Duong also said that this type of approval may be helpful in easing restrictions imposed on holding Bitcoin. Basically, Duong sees Bitcoin spot ETFs as that vehicle to meet the regulatory requirements required to open the door to new products that will be able to use it as an underlying. 

“ETFs will ease the restrictions for large money managers and institutions to buy and hold bitcoin, which will improve liquidity and price discovery for all market participants. 

Plus, having a vehicle that meets key regulatory and compliance requirements may also open the door to new products, such as lending, futures and options, which could utilize ETFs as their underlying. If that materializes, it can multiply the existing crypto offerings for accredited investors and widely expand adoption.”

Coinbase and its forecasting on the SEC approval of Bitcoin ETFs

Continuing with the report, the Coinbase Institutional representative also talked about when the approval of spot Bitcoin ETFs by the US SEC will take place. 

And indeed, Duong sees the end of 2023 as the deadline. Here are Duong’s own words: 

“In our view, chances have sharply improved that one or more spot bitcoin ETFs may be approved by the US Securities and Exchange Commission (SEC) before the end of 4Q23.”

He added the following:

“Typically, the SEC extends its decision window to the furthest extent allowed by its regulatory framework, which in this case would be the final deadline of January 10, 2024 for the ARK-21Shares Bitcoin ETF application.”

Coinbase further noted, citing Bloomberg Intelligence: 

“In recent weeks, we’ve seen a number of applicants amend their prospectuses with updated language, suggesting meaningful dialogue between these teams and the SEC. Although this is commonplace for such applications in other asset classes, this is a first for crypto.”

Positive news on BlackRock’s application pending verdict

Just these days, there has been talk about the Bitcoin spot ETF proposed mainly by BlackRock, as markets are waiting for the official verdict

And in fact, BlackRock itself has explained the reasons why the SEC should primarily approve its request to issue an ETF on spot ETH as well as on spot BTC. 

In any case, again, the SEC is expected to officially rule on an ETF on spot Bitcoin in early January 2024, while that on Ethereum will still take months.