The post Spot Bitcoin ETFs Raise Volatility Concerns: Analyst Predicts Potential Regulatory Clampdown appeared on BitcoinEthereumNews.com.

– Advertisement – SPONSORED Jim Bianco highlights risks in the bitcoin market due to the dominance of speculative traders in spot bitcoin ETFs. Concerns of a ‘Vol-Mageddon’ scenario in crypto markets, similar to the volatility ETF crisis of February 2018. “The regulatory leviathan could descend upon bitcoin and crypto like never before.” – Jim Bianco Market analyst Jim Bianco warns of increased volatility and regulatory repercussions for the crypto industry due to speculative trading in spot bitcoin ETFs. Understanding the Impact of Spot Bitcoin ETFs In a recent analysis, Jim Bianco, a well-respected market analyst, has voiced concerns over the approval of spot bitcoin Exchange-Traded Funds (ETFs), warning of potential market instability. The core of Bianco’s argument lies in the composition of the investor base for these ETFs, which he believes is dominated by short-term speculative traders, or “degens,” rather than long-term investors, or “hodlers.” This shift towards speculative trading in the realm of bitcoin ETFs could usher in unprecedented volatility, putting the broader cryptocurrency market at risk of significant regulatory actions. The Role of Trader vs. Allocator ETFs Bianco distinguishes between “trader ETFs,” favored by speculative investors, and “allocator ETFs,” which are typically sought after by long-term investors. Over the past six years, allocator ETFs have seen cumulative flows of $750 billion, dwarfing the $68 billion observed in trader ETFs. Despite the substantial assets managed by trader-focused ETFs, the absence of major allocator firms like Vanguard from the spot bitcoin ETF market signals a concerning trend. The lack of participation from long-term, stable investors suggests that the spot bitcoin ETF space may be overly reliant on speculative trading practices, setting the stage for potential volatility spikes akin to the 2018 ‘Vol-Mageddon’ event. The Danger of In-Kind Redemption Bans A pivotal aspect of Bianco’s warning revolves around the unique regulatory…

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Filed under: News - @ February 20, 2024 8:10 am