The U.S. Securities and Exchange Commission has approved the first spot bitcoin ETF in a watershed moment that cryptocurrency enthusiasts are betting will draw new retail and institutional investors into the market. Yesterday afternoon, after early week drama and a hacked twitter account, history was made on Wall Street.
The spot Bitcoin ETF, the most anticipated exchange-traded fund (ETF) in history, or in this case, batch of ETFs, was finally approved by the U.S Securities and Exchange Commission (SEC).
Bitcoin ETF Approved
This Bitcoin ETF approved status was achieved after a multi-year wait and several legal battles. A Bitcoin spot ETF is a financial product that tracks the price of Bitcoin directly by holding the cryptocurrency itself rather than futures of derivative contracts.
“It’s a huge milestone, it’s recognition of bitcoin being a large-scale traditional investment,” said Jad Comair, chief executive of Melanion Capital, the first company to launch a bitcoin thematic ETF in the EU. “We’re opening the doors to Wall Street.”
How Bitcoin ETF trading works?
This type of ETF allows investors to gain exposure to Bitcoin’s price movements without actually owning the digital asset. By trading on traditional stock exchanges, a Bitcoin spot ETF provides a regulated and accessible way for investors to participate in the crypto market without the complexities of directly managing digital wallets or trading cryptocurrency exchanges.
What does a bitcoin ETF mean for investors?
A bitcoin ETF opens up the audience of people and institutions that can buy and sell bitcoin to those with little experience trading cryptocurrency.
“This ETF has two main impacts: increased distribution in the U.S. and increased credibility of crypto as an ‘asset class,” as per Kevin de Patoul, co-founder and CEO of crypto liquidity provider Keyrock.
“There is now a U.S. bitcoin spot ETF, and bitcoin is no longer considered shady or infamous. This significantly changes the perception for the mainstream public.”
It also means that bitcoin could start appearing in mainstream portfolios, where many more retail investors can gain exposure.
What is next after bitcoin ETF getting approved?
U.S. institutional and retail investors will now be able to gain direct exposure to the coin through a regulated product, without the risks of buying from unregulated exchanges or the higher costs associated with ETFs that invest in bitcoin futures. Though the investors should look out for the following:
Track the ETF volumes
As Spot Bitcoin ETF trading goes live Thursday, investors should track the ETF volumes to see if the interest is as real as the hype. The key ETF to monitor is BlackRock’s IBIT spot Bitcoin ETF. BlackRock is the world’s largest asset manager and currently holds the all-time day-one flow and volume record for an IPO.
Bitcoin Adoption
The meteoric rise of Bitcoin’s was due to a grassroots movement by mostly younger people. The question now becomes whether or not older generations will begin to adopt Bitcoin through traditional means. Though it is too early to tell, as per a recent survey of financial advisors suggest that adoption will take place, but in a meaningful way.
Expect volatility
It is expected to have volatility in market after such big announcement. Higher volatility means larger price fluctuations, reflecting greater uncertainty and risk. To combat volatility traders can trade smaller or wait until the storm passes.
Size up the trading chart
Always size up a chart of Bitcoin because a chart represents actual supply and demand. Currently, the Bitcoin chart is in a strong uptrend and is breaking out of a bullish consolidation.
Is an Ethereum ETF coming?
Yesterday’s action once again proved that the market is the master manipulator. While all eyes were on Bitcoin, Ethereum outperformed and rose 10%. Are investors anticipating an ETH ETF in the future?
