Spot Bitcoin ETFs Seen as Potential Tool to Broaden Ownership, Increase Liquidity and Help Tame Volatility
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Spot ETFs could reduce the influence of crypto whales and help lower bitcoin's volatility by broadening the owner base.
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Deeper pool of bitcoin investors via an ETF may lead to greater liquidity, ensuring less volatile trading conditions.
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As crypto market matures with more institutional liquidity, volatility tends to drop over time.
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In equity markets, increase in ETF ownership has been shown to boost liquidity in underlying stocks.
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However, if spot bitcoin ETFs rely on cash creation rather than in-kind, they could inadvertently add to price volatility around time of net asset value calculation.