Bitcoin ETF: What’s All The Fuss?
All you need to know about the BTC ETF
I wanted to give you the low down on the Bitcoin ETF that’s been in the news recently.
But, honestly, there are people WAY better qualified to talk about Crypto than me.
So in an effort to try and bring you the best stuff from the best people, I got a Crypto expert to tell us all we need to know…
What’s all the Fuss About Bitcoin ETFs?
So, Bitcoin achieved a huge milestone at the beginning of 2024.
You’ve probably heard that the US Securities and Exchange Commission (SEC) gave its nod to a list of Bitcoin exchange-traded funds (ETFs).
Crypto enthusiasts all around the world marked this momentous occasion – it was on January 10. I imagine many bottles of sparkling wine were consumed on that day.
But why all the fuss? Why does it matter?
Let’s dig in…
What Are Spot Bitcoin ETFs?
Let’s start by explaining what a spot Bitcoin ETF is in the first place. In short, it’s an investment fund giving direct exposure to Bitcoin.
There are also futures-based Bitcoin ETFs as well – these investment vehicles mirror the price of Bitcoin futures contracts, which are speculative derivatives.
However, spot Bitcoin ETFs actually hold the cryptocurrency with a custodian, giving investors the opportunity to trade the crypto on their traditional brokerage platform.
Now, traditional investors feel relieved – they don’t have to spend time and energy on learning about dealing with a crypto exchange, managing a digital wallet, passing KYC checks, buying stablecoins to exit crypto positions easier, keeping seed phrases in the most secret place, and all that stuff.
Bitcoin is now on the stock exchange, and that is convenient for investors and traders.
You can trade it like any other stock.
What’s the Impact of Bitcoin ETFs on the Crypto Market?
I mean, that’s an easy one.
Bitcoin is on Wall Street.
Who could see that coming a few years ago when JPMorgan chief Jamie Dimon called Bitcoin buyers stupid?
Bitcoin has gained a sense of legitimacy in the eyes of Wall Street players…well, except for Dimon – this guy is a tough nut!
So, the whales with deep pockets now have a new toy to play with.
You may expect hedge funds and other major players to get exposure to BTC – we’re talking about people who wouldn’t traditionally invest in crypto.
And it’s not only about institutions. Retail investors and traders like you and me can get exposure to give a boost to traditional portfolios.
While this may not happen overnight, Bitcoin ETFs are expected to inject new capital, supporting the crypto space and stabilizing prices.
What Bitcoin ETFs Have Been Approved?
After years of desperate waiting and months of delay, the SEC green-lighted 11 spot BTC ETF applications, including:
- Grayscale Bitcoin Trust
- BlackRock’s iShares Bitcoin Trust
- Bitwise Bitcoin ETF
- VanEck Bitcoin Trust
- Hashdex Bitcoin ETF
- Valkyrie Bitcoin Fund
- ARK 21Shares Bitcoin ETF
- Invesco Galaxy Bitcoin ETF
- WisdomTree Bitcoin Fund
- Fidelity Wise Origin Bitcoin Fund
- Franklin Bitcoin ETF
So yes – we have BlackRock, the investment behemoth with $10 trillion AUM.
Crypto Market Reaction
Immediately after their launch, BTC ETFs made some waves, but the price of Bitcoin actually declined 16% in the first 2 weeks despite hopes of a bull run extension.
Don’t ask me why… sell the news maybe?
What I know for sure is that investors have priced in the SEC’s approval months before it happened, and the slower-than-expected inflow has probably put some pressure on the BTC price.
(It’s actually popped a bit since then over $40k… can it hold?)
In fact, we’re still waiting for new liquidity – so far, most of what is perceived as new inflows is simply capital moving from Grayscale to other ETFs.
Still, trading is active.
On the first day, $4.6 billion worth of BTC ETF shares changed hands, and the figure remained above $2 billion.
https://www.theblock.co/data/crypto-markets/bitcoin-etf/bitcoin-spot-etf-volumes
Let’s see what happens next.