The spot Bitcoin ETF will be disadvantageous to cryptocurrency exchanges.

Janak9955

Despite the crypto community eagerly awaiting the approval of a U.S. spot Bitcoin exchange-traded fund (ETF), some analysts warn that this could have adverse consequences for cryptocurrency exchanges. Some industry observers predict that the spot Bitcoin ETF might begin trading in early 2024, potentially coinciding with the anticipated Bitcoin block reward halving in April, which Blockstream CEO Adam Back believes could drive BTC to $100,000.

Bitcoin supporters like Jan3 CEO Samson Mow suggest that the approval of a U.S. spot Bitcoin ETF might even propel the Bitcoin price to $1 million in the "next few days to weeks." However, Nate Geraci, President of ETF Store, and Bloomberg ETF analyst Eric Balchunas are not as optimistic about predictions for centralized cryptocurrency exchanges.

Geraci stated on December 17 on X (formerly Twitter) that once approved, a potential U.S. spot Bitcoin ETF could lead to a "slaughter" for cryptocurrency exchanges. He mentioned that retail spot Bitcoin ETF buyers and sellers would benefit from institutional trade execution and commissions. On the other hand, retail users of cryptocurrency exchanges would face "retail trade execution and commissions," emphasizing the need for improvement to compete with a spot Bitcoin ETF.

Bloomberg ETF analyst Eric Balchunas emphasized that the trading fees for a spot Bitcoin ETF are 0.01%, which is the average fee for ETF trading. In comparison, exchanges like Coinbase have trading costs of 0.6%, depending on the cryptocurrency, trading volume, and trading pairs.

Balchunas believes that once approved, a spot Bitcoin ETF

will bring more price competition to the crypto industry, directing funds away from exchanges that spend significant cash on advertising their services during events like the Super Bowl.

Historically, Coinbase has derived a significant portion of its revenue from transaction fees. In 2022, Coinbase earned $2.4 billion in transaction fees from institutional and retail investors, representing 77% of its total net revenue of $3.1 billion. However, the company has been actively working to reduce its reliance on fees and diversify revenue sources through subscription and other additional revenue-generating services.

Isha000

It seems that the days of exchanges are not going well.

977Iti

This disadvantage is also unrelated to us.