Setback for Bitcoin and Ethereum ETFs – Fear of Inflation in the USA

Setback for Bitcoin and Ethereum ETFs: Fear of Inflation in the USA

The U.S. stock markets ended the last trading week with red numbers. The reason was disappointment with the jobs report from September, which once again showed a continuing strong labor market. For the crypto market, this meant losses on Friday. If new fear of inflation spreads, this could also mean a setback for the upcoming approval of Bitcoin and Ethereum ETFs in the spot market.

Will Inflation Postpone the Bitcoin Spot ETFs Again?

In October, the future of Bitcoin and thereby the crypto market is closely tied to the question of whether the U.S. Securities and Exchange Commission (SEC) will approve Bitcoin Spot ETFs. Experienced analysts assume that the SEC has until January 2024 at the latest to hold off BlackRock and several other major players in the financial world. BlackRock and its comrades-in-arms have submitted official applications since June, requesting permission to launch Bitcoin Spot ETFs in the world’s largest financial market, the U.S. stock exchanges.

The general market environment in the fall is also being closely monitored by the SEC. That’s because intense debates continue about the U.S. Federal Reserve’s interest rate policy, which is influenced by inflation and the job market. If unemployment remains low in the U.S., that typically means increasing wages, which generally acts as a fuel for inflation. Therefore, interest rate hikes are not yet a relic of the past. However, the SEC’s approval of Bitcoin Spot ETFs would calmly appeal to market participants because it would signal that the crypto market is becoming an integral part of traditional finance.

Ethereum Spot ETFs Wait in Line

Parallel to the approval process for Bitcoin Spot ETFs in the U.S., contenders for Ethereum Spot ETFs are also in the starting blocks. A glimmer of hope for investors is that the SEC recently already allowed ETFs on Ethereum futures. This seems to show: the barriers for an Ethereum Spot ETF approval are lower because Bitcoin is usually seen as the first choice by institutional investors when diversifying investment portfolios with crypto. A Cryptocurrency Spot ETF firmly pins the corresponding digital asset on the market price, while the value of futures ETFs is derived only indirectly.

Conclusion: More Market Trends than Crypto Factors Determine the Course

The example last Friday shows: The financial world oriented towards the U.S. continues to focus on macroeconomic developments. Fear of inflation and the influence of the U.S. Federal Reserve as a countermeasure shape the trading landscape. This even outweighs the prospects surrounding Bitcoin and Ethereum Spot ETFs. Nevertheless, positive signals will not go unnoticed. After all, the longing for regulated financial products based on cryptocurrencies continues to be high.