In a watershed moment for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin exchange-traded funds (ETFs) on 11 January 2024. This approval marks the end of a decade-long regulatory journey and signifies a major milestone for the mainstream acceptance of bitcoin as a legitimate investment.
The approved ETFs include offerings from prominent asset managers such as BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck. Notable among them are BlackRock’s iShares Bitcoin Trust and Grayscale Bitcoin Trust, which began trading in early premarket hours. VanEck Bitcoin Trust, Invesco Galaxy Bitcoin ETF, and ARK 21Shares Bitcoin ETF are expected to follow suit shortly.
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SEC Chair Gary Gensler emphasized that while the SEC approved certain spot Bitcoin ETFs for listing and trading, it does not endorse or approve Bitcoin itself. Investors were cautioned to remain vigilant due to the myriad risks associated with Bitcoin and related crypto products.
The regulatory nod is anticipated to trigger intense competition among ETF issuers for market share. With fees disclosed as low as 0.20%, the issuers are vying to attract investors by offering competitive pricing structures, some even waiving fees for specific periods or until reaching predetermined asset thresholds.
Analysts predict a gradual buildup of Bitcoin ETF flows, estimating them to surpass $10 billion in 2024 and potentially reaching $80 billion by the end of the next year. This approval is expected to simplify and secure bitcoin investments for a broader investor base, potentially reshaping the dynamics of cryptocurrency investments.
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Cryptocurrency-related stocks experienced a positive uptick in premarket trading, with companies like Riot Platforms, Marathon Digital, Microstrategy, and Coinbase seeing notable gains. This suggests a broader positive sentiment in the market following the SEC’s historic decision.
In the lead-up to the SEC’s announcement, bitcoin had surged more than 150% in 2023, reaching a market capitalization exceeding $900 billion as of January 10, according to CoinGecko. The approval is anticipated to attract substantial inflows from institutions keen on entering the cryptocurrency market.
The approval of spot Bitcoin ETFs represents a pivotal moment in the cryptocurrency industry’s journey toward mainstream acceptance, bringing new opportunities and challenges for investors, issuers, and the broader financial landscape.