The rally that's carried Bitcoin above $60,000 last week extended into Monday, with investors relieved that regulators aren't moving to curtail opportunities in the cryptocurrency sector, as they become increasingly bullish about the arrival of a BTC-focused exchange traded fund (ETF).

Bitcoin has added over 8% over the last week on clear and positive signals that the Securities and Exchange Commission (SEC) will approve the Proshares ETF on Tuesday, and has spiked by over 30% since late September.

While SEC Chairman Gary Gensler recently reiterated that the crypto sector needs to be more heavily policed, markets have been relieved that U.S. regulators aren't heading toward a heavy-handed crackdown, such as that seen in China.

Matthew Hougan, Chief Investment Officer at Bitwise Asset Management, told Yahoo Finance that for the rest of this year, "really all that matters is [regulatory] clarity" for crypto investors. Bitwise has filed for a Bitcoin Futures ETF of its own, pending a late November approval deadline.

The digital coin is on a bull run not seen since before the Chinese government banned cryptocurrency mining in May, as it zeroes in on its record high near $65,000, and expectations are growing that the ETF will open up new avenues of growth for crypto. On Monday, Fundstrat Global Advisors co-founder Tom Lee predicted the fund could see $50 billion in annual inflows.

The regulatory approval is a seminal milestone in the digital coin's journey towards mainstream adoption, but some are decidedly lukewarm on the ETF's immediate impact. They question whether a futures-based product might spark the immediate pop so many crave — and argue that most investors are still better served by directly owning Bitcoin.

Debate about 'spot' vs. future ETFs

During a time of increasing scrutiny of the crypto sector, bitcoin – as volatile as it is – has emerged as one of the safest crypto assets in the event of a doomsday-style regulatory clampdown. And the incoming Bitcoin ETFs presents a hallmark step for increasing adoption.

Its advantage: investors with an online brokerage account can buy a Bitcoin ETF without directly holding the asset. Still, not all agree — including some bulls like prominent investor Anthony Pompliano, who questioned the conventional wisdom and the timing of the SEC's approval.

In a letter to subscribers last week, Pompliano asked if "the Bitcoin Futures ETF actually the best thing?"

Answering his own question, he stated: "Honestly, probably not. The approval of a bitcoin 'spot' ETF would be better from investors, both from a price tracking and fee structure standpoint. But beggars can’t be choosers in the beginning. So we are likely going to see the Bitcoin Futures ETFs trading" as early as this week, he wrote.

Bitwise's Hougan said his firm will be "squarely in the middle of the Bitcoin ETF game." However, he also expressed some dissatisfaction with the what the first official crypto ETF ultimately offers.

In addition to filing the futures-based Bitcoin ETF, Bitwise also performed copious amounts of research on the physical or spot Bitcoin ETF. This iteration of ETF is seen as having more upside, less complicated and diluted, than its futures equivalent launching tomorrow. That's why long time asset managers have spent spent the bulk of their time pitching a spot ETF to regulators, but to no immediate avail.

Yet the SEC hasn't shown any sign of approving a spot ETF this year, something Hougan can attest to after having about 19 meetings with the agency over the last 18 months, he told Yahoo Finance.

The SEC's main reservation on the spot BTC ETF: its regulated under 1933 securities law, which gives retail investors less protection than the 1940s act that covers futures-based products. A theoretical spot ETF is much simpler, said Hougan, who insisted it is "easier for investors to understand."

By comparison, a futures-based ETF doesn't track the Bitcoin price so clearly. It can be priced lower or higher than the current Bitcoin price.

For example, if an investor bought this fund at a price of $63,000, and the Bitcoin price did not budge above $62,000 by the time BTC Futures contracts expired, that investor would lose money.

"Its not the experience that investors want. They just want to own Bitcoin," Hougan said, referring to this futures-based ETF. "We see this in other futures ETFs, like the U.S. oil ETF (USO) or the natural gas ETF (UMG). They often don't reflect the spot price of oil or natural gas."

'Another water hose in your bathtub'

Still, for most market participants, any ETF is better than none at all — especially for those who have been eager for mainstream acceptance of crypto assets for years.

Martha Reyes, head of research at the digital asset prime exchange BEQUANT, agreed that while a spot ETF would be less costly and more efficient at tracking Bitcoin, a futures-based product was "a good start" that could eventually lead to bigger things, regardless of the potential for short-term disappointment.

"The news seems largely priced in at this point but we remain positive on bitcoin into year end and would be buyers on any pullback towards $50,000," Reyes told Yahoo Finance.

Historically, the expectations for BTC investment vehicles and instruments of a more institutional grade ended in a 'buy the rumor, sell the news' scenario for Bitcoin, according to Ulrik Lykke, founder and Executive Director at ARK36, a crypto-focused hedge fund.

Just as when El Salvador made Bitcoin legal tender last month,and the Coinbase IPO earlier this year, "buy the rumor, sell the news" situations means a bull run leading up to such an event plus a nice price pullback the day of when many traders see an opportunity for profit taking once expectation becomes reality, Lykke told Yahoo Finance.

Furthermore, he pointed to the launch of Bitcoin Futures by CME in 2017 or Bakkt in 2019 by the Intercontinental Exchange (ICE) as both "rather disappointing" moments for those anticipating a major price pop.

"It is like putting another water hose in your bathtub to fill it up more rapidly," Lykke joked.

"You’ll definitely see the water level rise quicker but the effect won’t be as immediate as you may expect. The Bitcoin ETF will have a net positive effect on the development of the space, but it likely won’t result in an immediate, dramatic rise in institutional adoption of digital assets,” he added.

David Hollerith is a senior reporter covering the cryptocurrency and stock markets. You can follow him @DsHollers.