The US Securities and Exchange Commission (SEC) has approved Bitcoin exchange traded funds (ETFs) that are publicly traded in the US. Despite warnings from regulators and investor groups about the risks involved, the US Securities and Exchange Commission has granted 11 applications by BlackRock, Ark Investments, Fidelity, Invesco, VanEck, and others to establish ETFs tracking the world's largest and oldest cryptocurrency.
The Bitcoin ETFs will be listed on the NYSE, Nasdaq, and the Chicago Board Options Exchange (CBOE), and their assets will be physical Bitcoin purchased via cryptocurrency exchanges and kept by custodians such as Coinbase. The items will be measured against a Bitcoin benchmark set by various exchanges or institutions.
Investors must recognise that purchasing Bitcoin or its units directly is not the same as purchasing a Bitcoin ETF. Bitcoin ETFs will allow investors to obtain exposure to the digital asset class without the difficulties and hazards associated with purchasing Bitcoin directly. Investors will be protected from the opaque cryptocurrency exchange process. As a result, and as should be evident, the crypto industry is going all in on this element.
According to Rajagopal Menon, VP at WazirX, Bitcoin ETFs will allow investors to indirectly hold Bitcoin and track its price changes without actually purchasing the asset. As investors' funds are linked to Bitcoin's popularity, it provides a means to gain exposure to the largest crypto by market size. "Crypto custody is a concern, especially large institutions and the Bitcoin ETF will be a boon for them," that's what he said.
"The approval of Bitcoin spot ETFs will attract institutional investors, leading to increased adoption and higher liquidity," stated Mudrex CEO Edul Patel. Positive developments in the US crypto sector often have an impact on worldwide market mood, he added.
There was little movement in Bitcoin following the announcement. With a total market capitalization of more than 900 billion dollars, the largest crypto asset was hanging around $46,300, up more than a percent. The oldest crypto asset has gained around 160 percent in the last year.
Other crypto tokens, on the other hand, were significantly higher. Ethereum, the second largest crypto coin, rose around 10%, while XRP gained approximately 7%. Other altcoins including as Polkadot, Polygon, Cardano, and Avalanche were up 14-20%. The overall market capitalization of cryptocurrency assets exceeded $1.75 trillion.
However, Bitcoin spot ETFs are already available in Canada and Europe, but the US SEC's approval opens the door to the world's largest capital market. Analysts anticipate an injection of institutional investment into the crypto market following the SEC's approval. According to certain predictions, BTC spot ETFs will get $1 billion in the next three months and $100 billion by the end of 2024.
"In the last three months, we have already seen an increase in interest rates and asset prices." "Such capital inflows into a single asset will have a clear cascading effect on all other digital assets with solid fundamentals," said Vikram Subburaj, CEO of Giottus Crypto Platform. "The capital infusion will not be a standalone phenomenon as there will be a demand-led and competition-driven offering of innovative products."
"While the initial effects in Bitcoin may be noticeable, legitimising crypto investment through regulated spot ETFs may attract a diverse investor base, increasing capital flows across various cryptocurrencies." The approval of Bitcoin spot ETFs indicates a maturing market that is likely to spread to other cryptocurrencies in the coming years," Mudrex's Patel remarked.
Some crypto specialists regard the US SEC certification as a huge success since it gives the crypto business respectability. They see ETFs in other cryptos or other locations creating avenues for Bitcoin ETFs in the near future. However, they are just rumours, and approval will only come after a protracted battle.
Giottus anticipates ETFs in other crypto assets as well. According to Subburaj, an Ethereum spot ETF is next on the agenda, and non-US locations such as Hong Kong have expressed interest in establishing similar products. "This is a watershed movement that will help solidify the position of crypto assets as a preferred alternative investment asset," he went on to say.
"The market sentiment following the approval of the BTC ETF has peaked, and this could spread to other developments that have been awaiting regulatory approval." "We will soon see this excitement shift to Ethereum as speculation about an Ethereum ETF mounts," Menon of WazirX said.
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