The Crypto world is currently holding its breath, waiting patiently and hopefully for the approval of Bitcoin Spot ETFs in the US. The wait for an elusive Bitcoin ETF In the US actual started over 10 years ago when the Winklevoss twins submitted the first Bitcoin ETF, which like other applications submitted over the last decade were rejected. Now though there is real hope that Bitcoin’s time has come with the likes of Blackrock, Fidelity, Vanguard and indeed many other investment giants, pushing hard for approval.
In August, the D.C. Circuit Court of Appeals ruled that the SEC’s denial of Grayscale Investment’s application to convert the Grayscale Bitcoin Trust (GBTC) into an ETF was invalid and must be reviewed, calling it an “arbitrary and capricious” rejection. The court said that federal agencies are required to “treat like cases alike.”
With the above D.C. Circuit Court of Appeals ruling, and the SEC not appealing the decision, the general feeling from leading financial analysts is that at long last, Bitcoin Spot ETFs are coming, and are coming soon, possibly before the 10th January 2024 when the SEC has to make a final decision.
But why is a Bitcoin Spot ETF such a big deal? Let me explain.
What is A Spot Bitcoin ETF
A Spot Bitcoin ETF is simply an exchange traded asset, which gives investors direct access to the market value of Bitcoin. For every Bitcoin ETF purchased, a Bitcoin is purchased and securely stored by the seller. In real terms, the main benefits of Bitcoin ETFs are firstly that the process of “buying in” to Bitcoin becomes as easy as buying stock and shares and of course the institutions offering the ETFs have the full responsibility of safety storing all Bitcoins purchased and are strictly audited by financial authorities. Bitcoin ETFs also give Bitcoin acceptance in the traditional financial market place, giving Bitcoin exposure to not only the general retail investor but the giant investment funds such as Blackrock, Vanguard, Fidelity and many others. It is a fact that if Blackrock alone invested just 1% of its total fund into Bitcoin, then they would need to buy every available Bitcoin that is currently available on crypto exchanges, which of course would create unprecedented demand, driving up Bitcoins price to a new all time high.
Why is a Spot Bitcoin ETF Such a Big Deal?
- The large demand for Bitcoin for the likes of Blackrock, Vanguard, etc, will in effect hoover up available Bitcoin from crypto exchanges vastly reducing Bitcoin’s liquidity which will drive up the price.
- Will open the door for pension funds and a range of other investment funds to invest.
- Will be available for retirement accounts and such like.
- Will give small retail investors an easy entry point without the hassle and worry of self custody.
- Will give Bitcoin greater exposure, as the online financial institutions selling Bitcoin ETFs will run multi million dollar marketing campaigns.
- Will validate Bitcoin in the traditional global financial world securing Bitcoin’s status as digital gold.
- With financial giants such as Blackrock, Vanguard, etc, all competing in the Bitcoin ETF marketplace, not only will we witness tough competition in regards to heavy marketing and services offered, but most possibly pressure to launch other Spot ETFs for other leading crypto coins. Blackpool and others have already submitted applications for an Ethereum ETF, so expect other crypto ETFs to follow too.
- Bitcoin Spot ETFs holdings will enable credits and yields which should attract plenty of interest from hedge funds.
- Bitcoin Mining companies will be able earn from their mined Bitcoins without the pressure of selling their holdings which again will reduce supply.
- Bitcoin will be able to be held on US corporate balance sheets without the current need complex accounting and self custody.
- The arrival of Bitcoin ETFs will create will create demand we’ve never seen before which many believe will see Bitcoin hit an all time high even before the halving.
- As Bitcoin moves into the traditional finance world it’s possible it’s price will stabilise cutting down on the volatile price swings we’ve seen since it’s conception.
Bitcoin ETF is Coming Soon!
It seems clear, US Bitcoin ETFs are coming soon, as the SEC is now under immense pressure to accept this year’s applications. It seems feasible that all the current applications are accepted at the same time so that no entity has a “first to market” advantage. And don’t forget Ethereum ETFs too, as these could be accepted at the same time or shortly after the roll out of the Bitcoin ETFs!
