The post Will Bitcoin ETFs Kill Crypto Exchanges? Bloomberg Analyst Thinks So! appeared first on Coinpedia Fintech News

The cryptocurrency community is eagerly awaiting the U.S. Securities and Exchange Commission’s (SEC) decision regarding Bitcoin exchange-traded funds (ETFs).

Bloomberg‘s senior ETF analyst, Eric Balchunas, recently made a noteworthy prediction on the “Unchained Crypto” podcast. He suggests that the introduction of Bitcoin ETFs could pose challenges for crypto exchanges, like Coinbase, known for their high fees.

Crypto exchanges like Coinbase will likely suffer when the SEC finally approves a spot bitcoin ETF, says @EricBalchunas, senior ETF analyst at Bloomberg Intelligence.

Do you agree?

Full episode: https://t.co/8qZzjKFHhj pic.twitter.com/Oq9oAhsSQJ

— Laura Shin (@laurashin) September 1, 2023

Bitcoin ETFs: A Threat to Crypto Exchanges?

Balchunas argues that if the U.S. government approves Bitcoin ETFs, many people might choose them over actual Bitcoin due to their cost-effectiveness and simplicity. This could potentially reduce the business volume for crypto exchanges that impose substantial trading fees.

Balchunas highlights the substantial fee differences: while some crypto exchanges charge as high as 1.5%, a Bitcoin ETF might charge as little as 0.35%. The appeal of saving money might prompt users to shift towards ETFs.

Read More: Probability Skyrockets To 75% For Spot Bitcoin ETF Approval, Says Bloomberg Analyst

Not at all is bad!

However, the situation isn’t entirely bleak for crypto exchanges. The rise of Bitcoin ETFs may indicate a significant shift towards custody service fees. Investment firms launching ETFs are unlikely to store their Bitcoin holdings casually, providing an opportunity for secure storage services.

Balchunas may be bullish on the prospects of Bitcoin ETFs, but he faces stiff opposition. Numerous social media users have countered, claiming decentralized exchanges won’t just roll over and play dead. These platforms cater to a different risk profile, one that may not be easily wooed by the allure of ETFs.

Tic-Toc: Time is Flying, SEC!

The upcoming decision by the U.S. Securities and Exchange Commission adds an extra layer of suspense to the situation. Following a court ruling that deemed the SEC’s rejection of Grayscale’s Bitcoin ETF application incorrect, Balchunas and his colleagues are growing more confident. They now estimate a 75% chance of spot Bitcoin ETFs launching this year.

Related: Is Binance the Reason for SEC’s Delay on Spot Bitcoin ETF?

As we await the SEC’s decision, scheduled for mid-October, the future of cryptocurrency exchanges hangs in the balance. Will ETFs be the meteor that causes an extinction-level event for high-fee crypto exchanges, or just another evolutionary pressure in the rapidly adapting world of crypto? Only time will tell!