April 23, 2024

US SEC approves bitcoin ETFs in watershed for crypto market

In a significant development for the world’s largest cryptocurrency and the broader crypto industry, the US securities regulator has given the green light to the first US-listed exchange-traded funds (ETFs) that track bitcoin, according to Gary Gensler, the Chair of the US Securities and Exchange Commission (SEC).
The SEC has approved 11 applications, including those from BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck, among others.The products are expected to start trading as early as Thursday, sparking a fierce competition for market share.
These ETFs, which have been in the making for a decade, are a game-changer for bitcoin. They offer institutional and retail investors exposure to the cryptocurrency without having to directly hold it.
Analysts at Standard Chartered predict that these ETFs could attract $50 billion to $100 billion this year alone, potentially driving the price of bitcoin as high as $100,000. However, other analysts believe that inflows will be closer to $55 billion over the next five years.
“It’s a huge positive for the institutionalization of bitcoin as an asset class,” said Andrew Bond, managing director and senior fintech analyst at Rosenblatt Securities. “The ETF approval will further legitimize bitcoin.”
The price of bitcoin rose by 3% to $47,300 following the news. The cryptocurrency has already surged more than 70% in recent months in anticipation of the approval, reaching its highest level since March 2022 earlier this week. Analysts suggest that success in acquiring assets for spot bitcoin ETFs will depend on fees and liquidity.
Some issuers have even lowered their fees in new filings this week to attract investors. These fees range from 0.2% to 1.5%, with some firms waiving fees entirely for a certain period of time.
For short-term speculators, liquidity is more important than fees. The more liquid an ETF is, the easier it is for investors to buy and redeem shares at prices that closely track the actual price of bitcoin.
Companies are also expected to heavily market these ETFs, with a flurry of online advertisements and other forms of promotion. Some issuers, such as Bitwise and VanEck, have already released advertisements promoting bitcoin.
“It is pretty unprecedented, so we’ll see how it works. I’ve never been in a situation where 10 of the same ETF was launched on the same day, so this is a new one,” said Steven McClurg, the chief investment officer at Valkyrie, whose ETF was among those approved on Wednesday.
(With agency inputs)

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