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Volatility expected in crypto market amid Bitcoin ETF launch in 2024

Bitcoin

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TL;DR

  • Bitcoin ETF launch in 2024 could bring market turbulence with institutional interest and arbitrage.
  • XRP ETF’s fate hinges on unresolved legal disputes with the SEC.
  • Hong Kong regulators’ positive outlook raises hopes for XRP ETF, but legal hurdles remain.

As the year 2024 kicks off, the crypto community is buzzing with anticipation and apprehension regarding the launch of the Bitcoin Exchange-Traded Fund (ETF) on the Toronto Stock Exchange (TSX) under the ticker symbol EBIT. While many analysts predict a significant surge in the cryptocurrency market cap, there is a growing concern about the potential volatility that may accompany the ETF’s introduction.

Bitcoin ETF’s impact on cryptocurrencies

Bitcoin, the largest and most renowned cryptocurrency, is projected to reach a staggering $130,000 by the end of 2025, according to various analysts. This bullish outlook is further fueled by the impending Bitcoin ETF launch, which is expected to attract substantial institutional investment. 

However, some experts, including Ripple enthusiast WrathofKahneman, warn that the ETF’s arrival could bring about a period of heightened volatility in the crypto market.

WrathofKahneman took to Twitter to voice his concerns, emphasizing that the influx of institutional funds is not the sole factor contributing to potential market turbulence. He pointed out that the arbitrage opportunities between the ETF and the underlying Bitcoin asset could exacerbate price fluctuations. 

In his tweet, he stated, “Crypto ETFs in 2024 mean volatility. It’s not just the influx of institutional funds, it’s the arbitrage between the ETF & the underlying asset. And not many co’s house both ETF & Crypto under one roof, exacerbating arbitrage opp’s.”

While the Bitcoin ETF’s launch is imminent, the XRP community is still eagerly awaiting news of a potential XRP ETF. However, WrathofKahneman and others believe that such an ETF is unlikely to materialize until the protracted legal battle involving Ripple Labs and the U.S. Securities and Exchange Commission (SEC) is resolved.

The legal dispute surrounding XRP’s classification as a security or a digital asset has been a significant hindrance to any potential XRP ETF. Regulatory clarity and a favorable resolution of the case are seen as prerequisites for the introduction of an XRP ETF. WrathofKahneman succinctly expressed this sentiment, stating, “Can’t imagine XRP ETFs until case is over.”

Institutional involvement and crypto whales

The arrival of the Bitcoin ETF is expected to bring an influx of institutional funds into the crypto space. While this could lead to greater mainstream acceptance and increased market capitalization, it also raises concerns about the concentration of power among crypto whales – individuals or entities holding large quantities of cryptocurrencies.

WrathofKahneman and others suggest that as institutional players enter the market through the ETF, they may exert a significant influence on cryptocurrency prices. The behavior of these institutional investors could potentially lead to heightened volatility as they navigate the crypto market.

Regulatory developments and XRP ETF speculations

Recent developments in Hong Kong have rekindled hopes among XRP enthusiasts for the possibility of an XRP ETF. The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) have indicated a reassessment of their crypto policies and expressed concerns about Spot ETFs. This positive signal has drawn the attention of XRP supporters like Yassin Mobarak and Luo Boren, who hope for a favorable regulatory environment for an XRP ETF.

Grayscale Investments’ recent sponsorship of XRP price displays alongside Bitcoin and Ethereum has reignited speculation about the potential launch of an XRP ETF. Despite these developments, WrathofKahneman remains skeptical, citing the ongoing legal case as a significant hurdle to any imminent XRP ETF.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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James Kinoti

A crypto enthusiast, James finds pleasure in sharing knowledge on fintech, cryptocurrency as well as blockchain and frontier technologies. The latest innovations in the crypto industry, crypto gaming, AI, blockchain technology, and other technologies are his preoccupation. His mission: be on track with transformative applications in various industries.

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