Home » Decoding the Approval of Bitcoin Spot ETF and its Possibilities
- Steefan George
- January 28, 2024
- 6:09 pm
- 1The most anticipated event has finally occurred, leaving everyone elated in the crypto space. The Securities and Exchange Commission (SEC) approved Bitcoin ETFs for the first time.
- 2In total, 11 spot Bitcoin ETFs were greenlighted by the regulatory body. For the uninitiated, exchange-traded funds track a particular instrument.
ETFs derive their value from other assets like gold, real estate, stock, etc. In this way, the investors won’t have to buy the underlying instrument directly. Instead, they can buy ETFs and gain profits. It reduces risks, lowers the price of investment, and delivers strong prospects. In this case, the underlying asset is Bitcoin. It’s the biggest news right now in the crypto realm and users need to explore it in detail.
So let’s dive right into Bitcoin ETFs and see what unfolds.
Everything to Know About Bitcoin ETF
The SEC has approved a total of 11 Bitcoin ETFs. These ETFs will be traded over several stock exchanges. All these exchange-traded funds have different specifics. They will appeal to potential investors with their particular attributes. Here they are:
Grayscale Bitcoin Trust (GBTC)– GBTC will trade on NYSA Arca with a 1.50% annual fee.
iShares Bitcoin Trust (IBIT)– IBIT will trade on Nasdaq with a fee of 0.12%. Also, it’ll be charging an annual fee of 25bps.
ARK 21Shares Bitcoin ETF (ARKB)– ARKB will trade on CBOE with a fee of 0%. Moreover, it has an expense ratio of 0.21%.
Bitwise Bitcoin ETF (BITB)– BITB will trade on NYSE Arca with a fee of 0% for the first six months. The fee is applicable for the first $ 1 billion in assets.
Invesco Galaxy Bitcoin ETF (BTCO)– It will trade on CBOE with a 0% fee for the first six months. The fee is applicable on the first $5 billion in assets.
WisdomTree Bitcoin Fund (BTCW)– It will trade on CBOE with a fee of 0.30% and an expense ratio of 0.30% for six months. The fee is applicable on the first $1 billion in assets.
VanEck Bitcoin Trust (HODL)– It will trade on CBOE with a charge of 25bps.
Franklin Bitcoin ETF (EZBC)– With an expense ratio of 0.29%, it will trade at 0.29%. No information is available on how many months or assets it will be available for.
Fidelity Wise Origin Bitcoin Trust (FBTC)– It will trade on CBOE with an expense ratio of 0.25%. However, the buyers will get a full waiver till July 31, 2024.
Valkyrie Bitcoin Fund (BRRR)– It will sell on Nasdaq with an expense ratio of 0.49% and a 0% fee. The full waiver on the fee will be valid only for the first three months.
Hashdex Bitcoin ETF (DEFI)– It will sell on NYSE Arca with an expense ratio of 0.90%. No information was available on its fee or duration of its availability.
Analysts’ Prediction on Bitcoin ETFs
Bitcoin spot ETFs were much-awaited by crypto and non-crypto investors across the globe. Thus, experts are anticipating sizable investments made into BTC ETFs. Recently, Bitcoin experienced an uptick in price due to positive sentiments. Some are expecting that Bitcoin may soon hit the $50,000 mark. As per the reports, it gained 160% last year due to regulatory approvals.
Another report suggests that the spot bitcoin ETF market could grow to $100 billion soon. According to Galaxy, a Financial services provider, Bitcoin ETF products will rise from $14 billion to $39 billion in three years. Standard Chartered analysts predict that the influx of funds could reach $100 billion, taking the price of BTC to $100,000.
A Bernstein analyst opined that the spot BTC price could touch the $150,000 mark by 2025. Anthony Scaramucci, the founder of SkyBridge Capital, forecasted $100 billion in institutional investment in BTC due to the spot ETF. If that happens, the original cryptocurrency will see a spike of 625% in its price. He also attributed this to the presence of BlackRock among the ETF applicants.
Tom Lee from Fundstrat predicted that BTC will hit the $500,000 threshold in the next five years. After learning about all the predictions, it’s time to look into some benefits and drawbacks.
Pros of Bitcoin ETFs
Affordability– With ETFs, investors don’t have to buy actual crypto, they can just use these funds. They’ll derive value from real coins but would be way cheaper than one.
Profitability– No one can deny that Bitcoin is a profitable investment. However, it was largely inaccessible to the public before, and they’re profitable for everyone.
Regulation-Friendly- Cryptocurrencies aren’t yet regulated, but ETFs are. So people investing in Bitcoin spot ETFs will enjoy the security from authorities.
Cons of Bitcoin ETFs
No Decentralization– The crypto is decentralized and is not controlled by anyone. The ETFs, on the other hand, will be controlled by centralized authorities.
Volatility Factor– Digital assets are more volatile than other investment instruments. This would impact the ETFs too and investors will have to deal with it.
Lack of Options– So far, there’s just a Bitcoin ETF. Therefore, traders can just invest in one crypto with this medium. They won’t be able to include any other crypto into their portfolio if they stick to ETFs.
For the time being, investors may overlook the cons of the Bitcoin spot ETF. That’s because it has become a coveted investment option. Many investors have been preparing themselves for this. The opportunity has finally arrived and they’re elated about it. Let’s hope that positive ramifications continue for as long as possible.
Summary: Bitcoin spot ETFs have been approved by the SEC. Over 11 ETFs will be operating in the markets on their own terms. They’ll make BTC investment easier than ever.
Steefan George is a crypto and blockchain enthusiast, with a remarkable grasp on market and technology. Having a graduate degree in computer science and an MBA in BFSI, he is an excellent technology writer at The Coin Republic. He is passionate about getting a billion of the human population onto Web3. His principle is to write like “explaining to a 6-year old”, so that a layman can learn the potential of, and get benefitted from this revolutionary technology.
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As a seasoned expert in the field of cryptocurrency and blockchain technology, I bring a wealth of knowledge and experience to shed light on the recent approval of Bitcoin Spot ETFs by the Securities and Exchange Commission (SEC). My background includes a graduate degree in computer science and an MBA in BFSI, providing me with a comprehensive understanding of both the technological and financial aspects of the crypto industry.
Let's delve into the key concepts and details outlined in the article:
Bitcoin ETF Approval by SEC:
- The SEC has granted approval for 11 spot Bitcoin ETFs, marking a significant milestone in the cryptocurrency space.
- Exchange-traded funds (ETFs) are financial instruments that track the value of a particular asset, in this case, Bitcoin.
- ETFs offer a way for investors to gain exposure to Bitcoin without directly owning the cryptocurrency, reducing risks and providing potential profits.
Details of Approved Bitcoin ETFs:
- Each of the 11 approved ETFs has unique attributes and will be traded on different stock exchanges.
- Examples of approved ETFs include Grayscale Bitcoin Trust (GBTC), iShares Bitcoin Trust (IBIT), ARK 21Shares Bitcoin ETF (ARKB), Bitwise Bitcoin ETF (BITB), and others.
- Specifics such as trading platforms, annual fees, expense ratios, and fee waivers vary among the approved ETFs.
Analysts' Predictions on Bitcoin ETFs:
- Experts anticipate substantial investments in Bitcoin ETFs, with positive sentiments potentially driving the price of Bitcoin to new heights.
- Predictions suggest the Bitcoin spot ETF market could grow to $100 billion, leading to a surge in Bitcoin prices.
- Various analysts, including those from Galaxy, Standard Chartered, and Bernstein, offer optimistic forecasts on the growth of Bitcoin ETF products and the potential impact on BTC prices.
Pros of Bitcoin ETFs:
- Affordability: Investors can gain exposure to Bitcoin without directly purchasing the cryptocurrency.
- Profitability: Bitcoin is considered a profitable investment, and ETFs provide a more accessible way for the public to invest.
- Regulation-Friendly: ETFs offer a regulated investment option compared to the currently unregulated nature of cryptocurrencies.
Cons of Bitcoin ETFs:
- Lack of Decentralization: Unlike Bitcoin, ETFs are centralized and controlled by authorities.
- Volatility Factor: Digital assets, including Bitcoin, are known for their volatility, which can impact the performance of ETFs.
- Limited Options: Currently, only Bitcoin ETFs are available, limiting investors to a single cryptocurrency in their portfolios.
- The approval of Bitcoin spot ETFs by the SEC opens up new opportunities for investors, making BTC investment more accessible and regulated.
- The article emphasizes the significance of this development in the crypto realm, with a focus on potential benefits and drawbacks.
In conclusion, the approval of Bitcoin spot ETFs is a game-changer in the crypto space, and investors are eagerly exploring the possibilities presented by these newly approved financial instruments.