The Bitcoin Exchange-Traded Fund (ETF) operates on stock exchanges and holds bitcoin as its primary asset, distinguishing it from futures ETFs that rely on future bitcoin contracts. In essence, spot ETFs directly mirror Bitcoin's price, providing investors with exposure to its fluctuations without necessitating direct ownership of the cryptocurrency. Comparable to acquiring shares in a company managing assets, investors can gain direct exposure to the leading cryptocurrency through their brokerage accounts within the ETF.
Nate Geraci, President at The ETF Store, suggests that the US Securities and Exchange Commission (SEC) may soon grant approval for these ETFs, with anticipated minor amendments and a potential Commissioner vote. The SEC has until January 10 to act on at least one of the applications, and speculations within the crypto community hint at multiple decisions being announced on that date.
For a spot-backed Bitcoin ETF to commence trading, two key technical requirements must be met. Firstly, the SEC must endorse the 19b-4 filings by the exchanges listing the ETFs. Secondly, the regulator must approve the relevant S-1 forms, which are the registration applications from potential issuers, including notable names like BlackRock and Fidelity.
Experts foresee a significant impact on Bitcoin's price with the introduction of a spot ETF, driven by heightened accessibility and liquidity. The anticipated surge in demand, coupled with Bitcoin's finite supply, is expected to drive prices upwards. This development would provide investors with an approved investment vehicle to engage with Bitcoin's price movements, appealing to a broader investor base.
Projections for Bitcoin's price post-ETF approval vary, with estimates ranging between USD 42,000 and USD 100,000 on average. The approval of a spot ETF is poised to intensify the demand for Bitcoin, potentially resulting in a supply squeeze. While some long-term bitcoin holders may choose to sell during peak prices, others are expected to retain their holdings despite market fluctuations.
