The US Securities and Exchange Commission (SEC) has shown the green light to 11 US-listed exchange traded funds (ETF) for bitcoin in the US, unlocking access for cryptocurrencies to several new investors who refrain from taking the extra steps involved in buying actual bitcoin. After a decade-long wait, the US SEC finally gave the green signal to 11 Bitcoin ETF applications, which include Blackrock, Fidelity, and Invesco among others.
With the help of an ETF, an investor can easily invest in assets or a group of assets without directly buying the assets themselves. Also, investors can easily trade ETFs on stock exchanges.
The ETFs will begin trading on Thursday and will offer a great opportunity for retail investors to leverage the growth of Bitcoin without holding or storing it, says Shivam Thakral, CEO of BuyUcoin.
ETFs normally have a long-term investment horizon with large ticket purchases which will add immense stability to the highly volatile crypto market
Shivam Thakral, CEO of BuyUcoin
“The race for Bitcoin ETF applications which picked up pace in October 2023, pushed the Bitcoin price to $47,000 in the first few days of 2024,” he says.
Bitcoin is currently trading at a $46,500 level and is expected to touch the $100,000 mark as predicted by banking giant Standard Chartered.
“A regulated Bitcoin financial product approved by a major global financial regulatory like the SEC will add a lot of credibility to digital assets which will create trust among institutional investors and encourage more traditional financial institutions to enter the space.
“ETFs normally have a long-term investment horizon with large ticket purchases which will add immense stability to the highly volatile crypto market. The mainstream adoption of Bitcoin will lead to massive innovation in digital assets and blockchain space as it will provide a fertile platform for launching new products, services, and applications. We are optimistic that other major crypto markets like India will soon follow the trend and create a more regulated environment for digital asset-based financial products,” he adds.
Ryan Lee, Chief Analyst at Bitget Research compares Bitcoin ETFs to Gold ETFs, since, as of December 2023, the assets under management (AUM) of gold ETFs have reached approximately US$209 billion, with half of the AUM in North America.
Bitcoin may experience an increase in price to around $48,000 to $50,000 after the approval of a spot ETF. The market conditions are expected to be influenced by the recognition and investment associated with such ETFs. Bitcoin ETF approval could unleash significant market demand, driving an upward trend in Bitcoin prices
Ryan Lee, Chief Analyst at Bitget Research
“Currently, BTC’s volatility is roughly 3.6 times that of gold. If BTC spot ETFs are approved, assuming these financial giants want to invest in BTC with a risk exposure similar to gold, they would need to invest approximately $30-40 billion,” he says.
“Similarly, looking back at the impact of gold ETFs on the market, the first gold-backed ETF to launch in the United States was the SPDR Gold Trust, which debuted on the NYSE on November 18, 2004, with the closing price of gold at $444.3 per ounce on that day. As other institutions gained access to gold exposure through ETF purchases, the influx of funds led to a steady increase in the spot price of gold, reaching $1,666 per ounce in 2012,” he adds.
Regarding regulatory arbitrage and adoption, he says that now that the SEC has approved Bitcoin ETFs, it is expected that financial institutions in other regions will apply for similar businesses in the United States.
“To prevent large and medium-sized financial institutions from transferring their funds out of the region, other financial centres such as London, Hong Kong, Singapore, and Tokyo are also expected to introduce policies related to BTC spot ETFs. This will ultimately lead to the widespread globalization and adoption of cryptocurrency. Additionally, the attributes of cryptocurrency are likely to expand beyond BTC to include ETH, stablecoins, and other tokens, allowing more people to understand the significance of cryptocurrency.”
He also forecasts the market situation as a favourable one, “Bitcoin may experience an increase in price to around $48,000 to $50,000 after the approval of a spot ETF. The market conditions are expected to be influenced by the recognition and investment associated with such ETFs. Bitcoin ETF approval could unleash significant market demand, driving an upward trend in Bitcoin prices.”
Gracy Chen, Managing Director at Bitget, says, “As the ETF is approved, it could unleash significant market demand, driving an upward trend in Bitcoin prices. However, the future price movement will also be impacted by further capital inflows into Bitcoin ETFs. The abundance or scarcity of funds will play a crucial role in market sentiment and price fluctuations, determining whether Bitcoin prices continue to rise or experience a decline. This event may trigger intense market volatility, and investors should closely monitor the market’s reaction post-ETF approval, as well as the flow of funds, to better formulate their investment strategies.
The future price movement will also be impacted by further capital inflows into Bitcoin ETFs. The abundance or scarcity of funds will play a crucial role in market sentiment and price fluctuations, determining whether Bitcoin prices continue to rise or experience a decline
Gracy Chen, Managing Director at Bitget
“The majority of Asian regions lean towards regulated financial vehicles. A regulated financial product around Bitcoin in Asia will add to the existing euphoria around digital assets in the region. As per a UN report, over 60% of the world’s youth live in Asia-Pacific, and the young population is naturally inclined towards innovative and new-age financial products. We anticipate rapid adoption of regulated Bitcoin ETFs across Asia especially after SEC’s Bitcoin ETF approval.”
Dhruvil Shah, SVP, Technology at Liminal Custody Solutions, says, “The digital asset industry is currently witnessing its defining moment, with the US SEC approving spot Bitcoin ETFs, which will begin trading on Thursday. I think this is a watershed moment for the crypto industry as a regulated Bitcoin financial product in one of the largest economies of the world will create a huge influx of capital into the crypto market. The approval of Bitcoin spot ETF will prove highly beneficial for the growth of sectors like Blockchain, Decentralised Finance, BTC ordinals, and digital asset custody, as the demand for such services will witness explosive growth.
I strongly believe that the US SEC approval will serve as a template for regulatory clarity in other geographies and will create a growth-oriented environment to support the mass adoption of digital assets
Dhruvil Shah, SVP, Technology at Liminal Custody Solutions
“I strongly believe that the US SEC approval will serve as a template for regulatory clarity in other geographies and will create a growth-oriented environment to support the mass adoption of digital assets. At Liminal, we are thrilled to witness such a historic moment, and we believe that these are exciting times to be a part of the digital asset revolution.
“The digital asset custody market is expected to touch $2 trillion by 2030 (Hackernoon report), and this seems like a realistic figure with the latest positive developments around the global digital asset industry.”
