| The 11 bitcoin ETFS Bitcoin Spot ETF Benefits of Bitcoin spot ETF Spot bitcoin ETFs vs. buying bitcoin Impact of the SEC approving bitcoin ETFs Benefits of spot bitcoin etf approval Conclusion |
The U.S. securities regulator approved the first U.S.-listed exchange-traded funds (ETFs) to track the world’s largest cryptocurrency, Bitcoin (BTC), and the crypto industry on Wednesday (10.01.24).
What are the 11 bitcoin ETFs?
The Security and Exchange Commission announced approval for these 11 applications: BlackRock’s iShares Bitcoin Trust, ARK 21Shares Bitcoin ETF, Grayscale Bitcoin Trust, Bitwise Bitcoin ETP Trust, Fidelity Wise Origin Bitcoin Trust, WisdomTree Bitcoin Fund, VanEck Bitcoin Trust, Valkyrie Bitcoin Fund, Invesco Galaxy Bitcoin ETF, Hashdex Bitcoin ETF, and Franklin Bitcoin ETF.
From that, two will trade on the Nasdaq, three will be on the New York Stock Exchange (NYSE), and Six of the ETFs will be listed on the Chicago Board Options Exchange (CBOE).
The issuers’ fees range from as low as 0.2% to as much as 1.5%. ARK and 21Shares, BlackRock, Bitwise, Fidelity, WisdomTree, Valkyrie Invesco, and Galaxy are doing introductory waivers with zero fees (aside from BlackRock at 0.12%) for a limited time.
After the SEC approval, Bitcoin’s price was slightly higher on the day, around $45,700, and is up 161.7% from the year-ago date, according to CoinMarketCap.
What is Bitcoin Spot ETF?
Bitcoin Exchange Traded Fund, Bitcoin ETF in short, is an investment instrument that allows crypto traders to profit from the price movements of the Bitcoin without holding the asset. The shares of the Bitcoin ETF can be traded like traditional stocks, making it easier for investors to participate in the cryptocurrency market.
Due to their regulated investment, Bitcoin ETFs have generated substantial interest from retail and institutional investors. The regulated approach attracts investors who need more certainty about directly purchasing and managing cryptocurrencies in the crypto trading exchanges, creating critical concerns about security, regulatory issues, or technical complexities.
What happens after the approval of Bitcoin spot ETF?
Until now, retail investors have only been able to gain cryptocurrency exposure by buying coins directly or through ETFs that trade in cryptocurrency futures. A spot bitcoin ETF will allow investors, especially retail investors, to access bitcoin without holding their investment in a wallet.
What are the benefits of Bitcoin spot ETF?
Spot Bitcoin ETFs Are a Better Option Than Alternatives Lower fees and costs become paramount to attracting new assets, leading issuers to market with competitive fees. Spot bitcoin ETFs significantly undercut the exorbitant fees charged by current crypto funds.
Will Bitcoin rise after ETF approval?
Bitcoin BTC -0.45%’s price traded hands at $47,107 at 6:28 p.m. ET on January 10, hours after the SEC officially announced the approval of spot bitcoin ETFs. Over the last 24 hours, the Block’s Price Page for Bitcoin indicates a 2.1% rise, showcasing the growth of the most widely used cryptocurrency in market capitalization.
Spot bitcoin ETFs vs. buying bitcoin: What’s the difference?
Investing in spot bitcoin ETFs differs from buying bitcoin directly in a few ways.
First, investors who put money into bitcoin ETFs do not own any bitcoin outright, Cory Klippsten, CEO of Swan Bitcoin, told CBS MoneyWatch. Second, financial firms will charge fees for trading and managing a bitcoin ETF. By contrast, people who buy Bitcoin directly pay a transaction fee, but there are no costs for managing the investment.
There are some advantages to owning Bitcoin through an ETF. For example, investors can hold and track their Bitcoin ETF in the same brokerage account as their other investments.
What could be the impact of the SEC approving bitcoin ETFs?
Investors are betting that the emergence of spot bitcoin ETFs will pump billions of dollars into the digital currency by making it easier and less intimidating to invest.
Firms like BlackRock and Fidelity are household names in financial services, and their move to enter the sector nudges Bitcoin further into the mainstream as an investment class while conferring legitimacy to the shadowy and highly volatile crypto industry.
What does BTC ETF approval mean?
They were updated on January 10, 2024. The Securities and Exchange Commission approved bitcoin exchange-traded funds (ETFs) backed by Wall Street on Wednesday. This critical regulatory stepwill make it easier for ordinary investors to put their money into the digital currency.
What are the benefits of spot bitcoin etf approval?
The bridge to mainstream adoption is the first benefit. ETFs can help bridge this gap between traditional finance and the crypto market, making it more accessible to mainstream investors who don’t have a formal way of investing in Crypto.
Market stability is the second key benefit. The approval of Bitcoin ETFs, such as the anticipated BlackRock Bitcoin ETF, can lead to market stability around Bitcoin. Institutional adoption and regulatory approval provide confidence to investors, contributing to a more mature and stable market.
This easily applies to Ethereum and other Cryptocurrencies as various ETFs launch shortly. The crypto market is known for intense fluctuations, mainly due to unproportionate amounts of volume being injected and siphoned year-over-year.
If you want Crypto to have more stable prices, you need more circulating capital, diversified investors, and extensive holdings (like those supporting ETFs) held in institutional custody.
How to Buy Bitcoin Spot ETF?
In the case of a spot bitcoin (BTC) ETF (the “spot” meaning it’s holding the assets we’re talking about, and not some artificial version or derivatives contract), each will gather a big stack of bitcoin, and the investor would buy a little piece of that pile.
Unsimilar to a mutual fund, you can buy and sell ETFs as much as you like during the trading day, as long as anybody else is also buying and selling.
How will bitcoin ETF affect bitcoin price?
Experts are divided about the immediate market impact of a spot Bitcoin ETF approval. They agree that it is likely to affect the price of Bitcoin positively, but just how much of a positive effect it will have and how many other crypto assets will be affected remains to be seen.
What is the disadvantage of Bitcoin Spot ETF?
- High Management Fees. Many Bitcoin ETFs have high management fees that can impact an investor’s overall returns over time and may be unfavorable to some. This could lead to a “fee war” between various institutions.
- Low liquidity and tracking error: Some ETFs may suffer from inferior liquidity and tracking errors. These drawbacks can affect a fund’s ability to accurately mirror the underlying asset’s performance, potentially leading to suboptimal returns over long periods.
- Regulatory Uncertainty. The delayed approval of certain ETFs, like the Spot Bitcoin ETF, exemplifies the challenges associated with regulatory processes and challenges, especially by agencies like the Securities and Exchange Commission (SEC). This poses a risk if unfavorable legislation is ratified in Congress down the line that invalidates financial products for Crypto.
Conclusion
Crypto-based ETFs, especially the anticipated Bitcoin Spot ETF, present exciting opportunities and notable risks. While these ETFs can potentially drive mainstream adoption, investors must approach them cautiously, considering fees, liquidity, and regulatory uncertainties. As the crypto market continues to develop, the role of ETFs will likely become increasingly significant.