Will an ETF increase volume?
Currently, investors in the US who do not have access to the futures market and are unwilling to open a digital wallet, are unable to speculate on cryptocurrency prices. The ETFs that could be approved by the SEC would change that scenario.
On May 20, the SEC announced that it would postpone its decision on a Bitcoin ETF for another 35 days, to continue the process of factfinding. The underlying reasons for the delays are that the SEC wants to gauge public opinion on a Bitcoin ETF. The delay should not be construed as a sign that the agency is saying no. They have not denied the approval so investors can still have hope.
Additionally, the SEC wants to gauge the volatility of Bitcoin. What they are likely to find is that Bitcoin can be even less volatile than some of the major US stock indices. Bitcoin futures, which are traded on the CME, are experiencing solid volumes. The increase in the demand for over-the-counter credit default swaps, which are marketed by investment banks, are hedged with Bitcoin futures.
The Bitcoin credit default swap dealer strategy is market neutral as they use the futures to offset the outright price risk, attempting to capture a bid-offer spread. This provides a natural damper to volatility as more traders enter the market.