Bitcoin has gained more in four weeks than it has in the past 17 months. In October, Bitcoin gained 30%, its best performance so far in 2025, dragging many altcoins along with it. What’s driving this surge? The Bitcoin Spot ETF.
If you’re up to date with crypto news, you’ve likely seen activity around the Bitcoin Spot ETF. Financial analysts, traders, and crypto adopters are optimistic and awaiting the approval of the Bitcoin Spot ETF by the Security and Exchange Commission (SEC). They also believe it will open the door to institutional funding for the cryptocurrency market, leading to the next surge.
What is a Bitcoin Spot ETF?
To understand what a Bitcoin spot ETF is, you first need to know what an ETF is. An ETF, short for Exchange Traded Fund, is an investment fund approved by the SEC. It allows investors to purchase a fund that invests in various financial instruments.
So, a Bitcoin spot ETF is an investment fund that tracks the price of Bitcoin. This fund allows ordinary investors to invest in Bitcoin without actually owning the cryptocurrency. Currently, to invest in Bitcoin, you need to have a technical understanding of how things work—you need to know how to navigate cryptocurrency exchanges, have a digital wallet, and know the best practices for storing your cryptocurrency to avoid getting hacked.
In short, investing in Bitcoin is open to a group with technical knowledge of how things work. But with the Bitcoin Spot ETF, traditional investors can trade the cryptocurrency just like they trade stocks in their regular brokerage accounts. Once approved, the Bitcoin Spot ETF will offer investors convenient and regulated ways to hold the digital currency with less risk.
How does the Bitcoin Spot ETF work?
The Bitcoin Spot ETF is an investment fund that tracks the price of Bitcoin. The price of the shares issued by the ETF reflects the current price of Bitcoin in the cryptocurrency market.
To track the price of Bitcoin, the ETF’s registered custodian must hold Bitcoin (the financial instrument it tracks) as the underlying asset in a secure digital vault and issue shares corresponding to the amount of Bitcoin it holds. These shares will be available for investors to trade on traditional stock markets without the technical hassle of purchasing them on cryptocurrency exchanges.
The Bitcoin spot ETF tracks the price of Bitcoin
The ETF rebalances its holdings (either by buying more bitcoins or selling the bitcoins in its vault) based on the number of shares it has issued. Suppose the spot Bitcoin ETF share trades on an exchange at a price higher or lower than the actual price of Bitcoin. The custodian will arbitrage the difference by buying back or creating shares in bulk to align the ETF’s price with the price of the actual cryptocurrency. With a spot Bitcoin ETF, the market becomes more efficient and liquid. It will be like buying shares on an exchange.
Is the Bitcoin Spot ETF a good thing for Bitcoin?
Absolutely! A spot ETF is good for Bitcoin. First, a spot ETF removes the hassle currently associated with investing in Bitcoin. It also lowers the barrier to entry, which encourages the adoption of the digital currency. A spot ETF for Bitcoin offers many advantages, which we’ll explore together right away.
High liquidity
A Bitcoin cash ETF will remove barriers to investing in Bitcoin. Bitcoin will thus transform from a technology attracting a minority of high-tech specialists to a global financial instrument. This will open Bitcoin investment to a broader group of institutional and private investors who are currently skeptical of digital currency. Institutional funds will gravitate toward Bitcoin, increasing liquidity.
Increased demand
Once the Bitcoin Spot ETF is approved, demand for the cryptocurrency will increase. The Bitcoin Spot ETF must hold Bitcoin as the underlying asset in a secure vault. With only 21 million Bitcoins to be supplied, demand for the cryptocurrency increases, leading to a rise in the price.
Ease of access
The spot ETF will make it easier for traditional investors to access Bitcoin. With the Bitcoin Spot ETF, investing in Bitcoin becomes easier. You don’t need to know how to navigate cryptocurrency exchanges, you don’t need a digital wallet, and you don’t need to learn the best practices for securing your digital wallet. What you need is a brokerage account to purchase the ETF shares in spot form.
Regulatory clarity and market legitimacy
The SEC’s approval of a Bitcoin spot ETF means that Bitcoin has become a recognized financial asset, a global phenomenon. Those who have been waiting on the sidelines will have more confidence to get involved. Furthermore, with the approval of the Bitcoin spot ETF, there will be greater transparency and standardized reporting, which will, once again, strengthen investor confidence in Bitcoin.
What is the difference between Bitcoin Spot ETF and Futures ETF?
The Bitcoin Spot ETF allows you to track the current price of Bitcoin. Let’s say Bitcoin costs $40,000 on cryptocurrency exchanges. One share of the Bitcoin Spot ETF would also cost $40,000. Additionally, there is direct exposure to price changes because the fund must hold Bitcoin in a digital vault to back the ETF. On the other hand, the Bitcoin Futures ETF tracks Bitcoin futures contracts. It speculates on the future price of Bitcoin and does not own Bitcoin. The Bitcoin Futures ETF may not always reflect the current price of Bitcoin.
What does the future hold for the Bitcoin Spot ETF?
As of 2025, the SEC had yet to approve a Bitcoin spot ETF, citing concerns about market manipulation, fraud, and investor protection. But there appears to be light at the end of the tunnel, as in recent weeks, the government agency decided not to appeal the court ruling that found the rejection of the Grayscale ETF proposal was wrong. This means the agency has reconsidered its position on Bitcoin spot ETFs. The dark cloud is already lifting, and a Bitcoin spot ETF is very close.
The approval of a spot ETF will not only benefit Bitcoin, but the entire cryptocurrency market. It will bridge the gap between cryptocurrency investing and traditional investing. The approval of the Bitcoin spot ETF in the United States is just one step that marks the beginning of a long journey (and likely a pretty bull market) for the entire cryptocurrency sector.
