📈 Momentous Approval: 11 spot Bitcoin ETFs have been approved by the US Securities and Exchange Commission, a move that crypto enthusiasts believe will bring new retail and institutional investors into the market. Fidelity, Invesco, Grayscale and Ark Invest are sponsors that will change the dynamics of crypto investment.
🔔 Trading Launch: As of Thursday, trading like stocks with special tax treatment in US ETFs is expected to start. Notably, BlackRock will ring the opening bell at Nasdaq to introduce its iShares Bitcoin Trust as an uptick signature for Bitcoin’s place in everyday finance.
📊 Market Reaction: 24 hours following the approval, Bitcoin registered a notable increase in trading activities, hitting $47k, though it remained below its high for 2021 of $69k. This jump is nearly three times higher than its December 2022 low, driven by the FTX’s collapse.
💡 SEC's Stance Shift: This approval is a U-turn by the SEC, which had been against spot Bitcoin ETFs for almost ten years due to fears of manipulation and fraud. This change was catalyzed by a federal appeals court ruling in August, which termed the SEC’s rejection as arbitrary and capricious.
🌐 Broader Implications: US approvals of spot Bitcoin ETFs are essential for the most popular and liquid crypto token. For US investors, both institutional and retail, they provide a secure means of gaining direct exposure to Bitcoin without the risks accompanying unregulated exchanges or higher costs found in futures-based ETFs.
🚨 Cautionary Voices: Enthusiasm exists, but some experts also warn about the risks of crypto market volatility and issues for investors at the retail level. SEC Chair Gary Gensler highlighted that approval is not a seal of authority, and investors must be careful.
📉 Fee Competition: A price war has emerged among ETF providers. BlackRock, Fidelity, and others have announced fees below 0.5%, with some waiving charges in the early months. Grayscale, converting its $29 billion Bitcoin trust into an ETF, has dropped its fee to 1.5%.
🔄 ETF Creation Process: Unlike traditional ETFs, these funds use cash to create and redeem shares rather than in-kind transactions with their underlying assets, Bitcoin.
