Share on
- Copy link
Crypto ETF is an efficient and cost-effective way to gain exposure to the crypto market. Now that Bitcoin ETF is approved, how can it help revive the NFT market?
Last updated Jan 13, 2024 at 04:50 AM
Posted Jan 12, 2024 at 07:00 PM
I remember the headline “Bitcoin is dead” after almost every crash. Some optimistic news outlets would put a question mark to soften the blow. What was once dismissed as a “Bitcoin bubble” now has a new financial reality with a marketcap of $900 billion. Bitcoin Spot ETF approval will bring in new investors, and the effect will trickle down to the altcoins and niche markets like NFTs and blockchain games.
Crypto ETFs or Bitcoin Spot ETFs are the Exchange Traded Funds that track the price of Bitcoin offer a more straightforward approach to trading Bitcoin. The ETFs represent the value of Bitcoin that you can hold without actually buying Bitcoin. The value of the Bitcoin ETF always equals the spot Bitcoin price.
Blackrock and many other prominent names were trying to seek Bitcoin Spot ETF approval from the Security and Exchange Commission (SEC). On January 9, 2024, around 3:11, “SEC grants approval for Bitcoin ETFs” is tweeted from the official X handle of SEC.
This swiftly sent the price to the moon, followed by a bearish rally as the news was misleading. 25 minutes later, Gary Gensler, an official from the SEC, revealed that the SEC’s account was hacked and no ETFs were approved. At 3:38, the SEC regains control of the account and deletes all the tweets related to ETF approval.
On January 11, Bitcoin ETF was approved, and Bitcoin gained nearly 11% - reaching a high of $48,700 within hours. Bitcoin whales were trying to pump the price of Bitcoin, as indicated by EL Capo of Crypto in his Telegram Channel:
Whales want the 48k-50k asks filled… Strong rejection from the 48k-50k resistance zone. It shows big players are selling there. Whales haven't filled all the asks, so it could still touch 50k before reversal.
Bitcoin Spot ETF approval from the SEC is a long-anticipated decision and a significant milestone in the mainstream adoption of Bitcoin and crypto. Bitcoin will now play a bridge between the mainstream financial ecosystem, altcoins, and other blockchain products.
Bitcoin has always been at the forefront of the crypto, which, with the SEC’s approval of ETF, is opening the door of institutional and retail investments to the crypto market. Following are the three main reasons why Bitcoin ETF is so significant for the crypto market:
Most of the NFTs driven by hype and fake utilities have lost most of their value. The optimistic teams behind many projects have abandoned their projects and communities. The NFT market has been on a bearish trajectory since early 2022, and it hasn’t recovered yet.
One of the prominent reasons for the fall of the NFT market is the devaluation of crypto tokens. All NFTs are valued in crypto tokens, and when the price of these tokens plummets, it triggers a bearish wave for these digital assets.
With the approval of BTC Spot ETF, we are already in a semi-bullish market. As the price of the crypto tokens is appreciating, the NFT market is slowly recovering. Moreover, the ETF gives crypto exposure to a new class that could be inclined to explore the NFT world. Here are 5 ways BTC ETF can benefit the NFT market:
The ETF approval will not only mount the buying pressure on Bitcoin, but it will also bring a new community to the market. We know NFTs from their insanely high prices. This new community can start that again, and once NFTs start making headlines, the wealth effect can shift the trend of NFTs to bullish.
NFT projects like Bored Ape Yacht have now become a class and a status symbol. Imagine someone buys a blue chip NFT, and that makes headlines. It can create insane buying pressure and demand for these assets.
Now that Bitcoin has become a part of the bigger game, so is crypto and crypto niches, including NFTs. NFTs were being adopted by Instagram, Spotify, Apple, etc. already. However, with this new phase of legitimization and trust that ETF provides, the NFT market becomes more credible and mature.
The first-generation NFTs were offering similar utilities and were mostly driven by the hype. With institutional interest driven to NFTs, the new era of NFT 2.0 starts that offers real use cases and a community-oriented approach. This new influx of investors could kickstart innovation and advancement in the NFT space.
You may classify NFTs as a micro niche of crypto, but their role in the web3, blockchain games, tokenization, and metaverse cannot be overstated. Bitcoin becoming mainstream makes NFTs an attractive place for investors to explore to expand TradeFi, GameFi, and Metaverse.
Integrating the traditional marketplace with NFTs can open new opportunities for investors, developers, and creators.
Once NFTs are in the limelight again, they will draw massive attention to themselves. The growing interest in NFTs might attract regulatory watchdogs who can provide more clarity on these digital assets. Once the NFTs are well regulated, the giant companies are more likely to invest and innovate.
As a pioneer, Bitcoin is leading the crypto to mainstream adoption, and the benefits are not limited to Bitcoin only. NFTs, the assets valued in crypto tokens, can directly benefit from the bullish wave in crypto. Major Blockchains like Ethereum, Solana, Polygon, and WAX can all benefit from these positive sentiments in the market and prepare for the upcoming bullish trend of the NFT space.