Bitcoin Hits European Markets: How the Arrival of the First Spot Bitcoin ETF Can Boost Acceptance in the EU

While it’s certainly been a turbulent year for bitcoin, there’s seemingly nothing capable of standing in the cryptocurrency’s way when it comes to building momentum towards mainstream acceptance. With the news that a spot bitcoin ETF is set to land in Europe this summer, European investors will have unprecedented access to BTC on traditional markets. 

In July, Europe’s first spot bitcoin exchange-traded fund will arrive on the Euronext Amsterdam, which is a major stock exchange and part of the pan-European marketplace, Euronext.

The ETF is to be launched by London-based digital asset management platform, Jacobi Asset Management, and the fund will start trading in the Dutch capital under the ticker BCOIN. The move is set to give European institutional and retail investors alike the opportunity to invest in bitcoin and the cryptocurrency market via the ETF for a 1.5% annual management fee. 

"Our product is the first spot or physical-backed Bitcoin fund, and the fund is not allowed to lend, stake or leverage any of the assets it owns,” said Jamie Khurshid, CEO of Jacobi Asset Management, in an interview with Cointelegraph. “For the first time in Europe, investors buying an exchange-traded Bitcoin product will own the units that own the Bitcoin. There are other exchange-traded products in Europe but no other spot BTC ETF.”

The arrival of a spot bitcoin ETF comes at a time when markets are reeling from a cocktail of factors like high inflation rates, the war in Ukraine and further COVID-19 complications. Using the S&P 500 as an example, we can see that leading cryptocurrencies like bitcoin and ethereum are down by a significantly larger margin than traditional markets. However, for many investors, this deeper level of volatility presents an attractive opportunity to find larger profit margins. Now, for the first time, we have sufficient BTC coverage in Europe, we may see more investors looking to catch bitcoin’s bottom price ahead of a prospective recovery.

"This will be the first Bitcoin ETF on Euronext, or the first fund directly investing in Bitcoin. All other currently existing products on our segment are exchange-traded notes, or legally structured as debt instruments," Stephane Boujnah, CEO of Euronext, said in a statement. 

Despite uncertain market conditions, history suggests that the timing of the Jacobi Bitcoin ETF may be a relatively good one when it hits European markets. With bitcoin operating at close to its historical bottom value following its post-halving bull cycles, it could be an excellent opportunity for investors to buy into the asset for investors who are optimistic about BTC’s future cyclical rallies.

Paving the way for Accessibility

The arrival of Europe’s first spot ETF is an excellent step for cryptocurrency accessibility in Europe. For investors who would prefer to retain their portfolios on more traditionally aligned stock exchanges, buying into a bitcoin exchange-traded fund can offer the same level of growth that cryptocurrencies are capable of without having to throw themselves into the unfamiliar world of crypto. 

According to Edd Carlton, who is a digital asset trader at Flow Traders, the listing of a spot bitcoin ETF is “aligned with the growing demand from institutional investors.” Carlton also noted that calls for a spot Bitcoin ETF have been made in the United States for many years.

Despite this, so far the only spot ETFs to be launched globally are based in Canada, Brazil and Jersey, and are considerably smaller in scale than many U.S. ETFs. This means that the arrival of the Jacobi Bitcoin ETF will be the biggest of its kind in the world. 

Although European ETF investing is far less developed than in the U.S., the accommodation of cryptocurrencies in a more traditional investing format is likely to be a popular move on the continent. At present, only around 15 to 20 percent of retail investors in Europe use ETFs, as opposed to around 40% of U.S. investors. While this means that there’s considerably lower trading volumes surrounding exchange-traded funds in Europe, it also means that the Jacobi Bitcoin ETF has been viewed as an opportunity to breathe new life into the market by the European Commission. 

By accommodating a spot bitcoin ETF in Europe, it’s now possible for institutions like insurance companies, mutual funds and pension funds alike to develop their exposure to bitcoin in a way that was previously impossible. Likewise, retail investors in Europe can look to stock trading platforms that incorporate ETFs as its core offering for access to crypto on a scale like never before. 

Although the market surrounding cryptocurrencies has suffered a turbulent start to 2022, the arrival of the Jacobi Bitcoin ETF is likely to see plenty of traffic once a recovery begins. For Europe as a whole, the continent’s first spot bitcoin exchange-traded fund is a bold step towards widespread crypto acceptance. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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