The moment the crypto world had been eagerly anticipating has finally arrived, and this time, it's the real deal. The US Securities and Exchange Commission (SEC) has given the green light for the first-ever spot Bitcoin ETFs, marking a pivotal moment that cryptocurrency enthusiasts believe will attract new investors to the market.
The top American securities regulator has granted approval for 11 spot Bitcoin ETFs. These funds are sponsored by a diverse range of entities, including well-established players like Fidelity and Invesco, as well as digitally focused newcomers such as Grayscale and Ark Invest.
This approval follows 11 years of anticipation and a contentious legal battle. The newly approved funds, which trade on exchanges similar to stocks and receive special tax treatment in the US, are now accessible to the general public, enabling them to buy, hold, and sell Bitcoin in a compliant environment.
This long-awaited development aims to make Bitcoin investing more accessible to everyday investors without requiring direct ownership of the digital asset.
Bitcoin has experienced volatile price fluctuations over its 15-year history. After reaching an all-time high of nearly $69,000 in November 2021, it dropped below $17,000 during the "crypto winter" of 2022, generally trading above $45,000 leading up to the SEC's decision. Following the announcement, Bitcoin price remained relatively steady at around $47,000.
While some crypto enthusiasts believe that ETFs will significantly increase demand for digital assets, some ETF observers are skeptical about a massive influx of funds into these products.
According to analysts at Standard Chartered, the newly launched ETFs could contribute $50 billion to $100 billion this year to Bitcoin's market cap, which is currently at $900 billion. After a remarkable 155% gain in 2023, Bitcoin price has increased by about 10% since the beginning of 2024.
For those contemplating entering the world of Bitcoin, it's crucial to note that the price of Bitcoin will still be just as volatile whether you invest directly or through an ETF. Earlier this week, Gensler issued a warning to investors about the risks of crypto investing, highlighting instances where major platforms and crypto assets have faced insolvency or lost value. Similar concerns have been echoed by many financial advisers, with some strongly opposing the SEC's approval of Bitcoin ETFs.
In any case, this move brings about significant changes, and whether it's for the better or worse, the impact will become apparent soon.
