Most people think that an ETF approval will signal a bullish scenario since confidence will be restored. Every 401k will own BTC and we are headed to mass adoption. Right? Well, not so fast.
If the ETF gets accepted then the price will drop. The reason being is that with the ETF in place, the amount of Bitcoin that is going to be issued will increase tremendously. In other words, no real Bitcoin will be needed to be traded but rather their securities counterparts which will be backed by nothing other than paper.
Same thing happened to gold. Within an ETF, a commodity is no longer a commodity. It is an issued promise with no real actual keys, not even needed for one to hold actual Bitcoins. For example, one can hold 10,000 BTC within the ETF but trade 5,000,000BTC. All financial institutions do the same about pretty much everything else.
Bitcoin will join the massive unbacked derivatives market and will be part of the same systemic financial problem that it was trying to solve when it came to its existence.
A Bitcoin ETF approval will end BTC for good at one point with a systemic failure in case of a massively accepted fork. Since no keys will be owned by those holding the ETF, the only thing that will dump against itself (fork) is the real BTC. Only difference is that the magnitude in holdings on the ETF will be massive since 1 BTC will correspond to 100BTC or more within an ETF due to the nature of how Wall Street works.
If the ETF gets rejected then it will be a non-event since it is already priced in with the previous rejections. (Much like China bans). So unless the financial institutions change the way they trade, BTC is headed to its doom.