In early 2024, the crypto community was filled with excitement and concern over the launch of a Bitcoin exchange-traded fund (ETF) on the Toronto Stock Exchange (TSX) under the ticker symbol EBIT. While many analysts are predicting significant growth in cryptocurrency market capitalization, there is growing concern about the volatility that ETF adoption may bring.
According to several analysts, the largest and most famous Bitcoin will reach a whopping $130,000 by the end of 2025. This pessimism is further reinforced by the launch of a Bitcoin ETF, which is expected to attract significant institutional investment.
However, some experts, including Ripple enthusiast Wrathof Kahneman, warn that the emergence of ETFs could lead to periods of volatility in the cryptocurrency market.
Rotof Kahneman expressed concern on his Twitter page, pointing out that the excess of institutional funds is not the only factor responsible for market turmoil. He noted that arbitrage opportunities between the ETF and the underlying Bitcoin assets could increase price volatility.
He tweeted: “Crypto ETFs mean volatility in 2024. This is not just institutional cash flow, but an arbitrage between the ETF and the asset. And many companies don’t put ETFs and cryptos under the same umbrella, further reinforcing the arbitrage barrier.”
Despite the recent launch of the Bitcoin ETF, the XRP community remains excited to learn about a possible XRP ETF. However, WathofKahneman and others believe such an ETF cannot become a reality until the long legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC) is resolved.
The legal battle over the classification of XRP as a security or digital asset has been a major obstacle for any XRP ETF. Regulatory transparency and favorable processing are considered prerequisites for inclusion in the XRP ETF. Anger Kahneman summed up this sentiment when he said: “I didn’t see the XRP ETF until the case was over.”
Institutional Participation and Crypto Whales
The creation of the Bitcoin ETF is expected to push institutional funds into the crypto space. While this may lead to greater adoption and higher market capitalization, the concentration of power among crypto whales also raises concerns about individuals or companies owning large amounts of cryptocurrencies.
Rothoff notes that Kahneman and other institutional players can have a significant impact on cryptocurrency prices if they enter the market through ETFs. The behavior of these institutional investors may lead to increased volatility in the cryptocurrency market.
Considering regulatory changes and the XRP ETF
Recent events in Hong Kong have raised hopes among XRP enthusiasts regarding the possibility of creating an XRP ETF. The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) are reconsidering their cryptocurrency policies and have raised concerns about spot ETFs. This positive signal has caught the attention of XRP supporters such as Yassin Mobarak and Luo Boren, who are hoping for a favorable regulatory environment for the XRP ETF.
Greyscale Investments' acceptance of XRP prices alongside Bitcoin and Ethereum has fueled speculation about the launch of an XRP ETF. Despite these developments, WrathofKahneman is still skeptical, citing the ongoing legal issue as a major obstacle for the future XRP ETF.