The Security and Exchange Commission of the USA gave the green signal for the Bitcoin ETF (Exchange Traded Fund) on January 10, 2024, to safeguard investors from fraudulent activities. It has already given its nod to applications made by some of the major asset management companies, such as Blackrock, Fidelity, Invesco, Ark Investments, and VanEck, to initiate ETF tracking for Bitcoin.
Bitcoin is by far the largest and oldest cryptocurrency in the world. You can buy Bitcoin in two ways: either by mining it or by purchasing it from the respective crypto exchange. However, obtaining a Bitcoin from either of these sources is costly and quite risky, and without a doubt, regulator scandals and frauds occur more prominently. This will not be the case with the Bitcoin ETFs as they offer more safety measures against fraud and scams. Stride along with this blog to learn about Bitcoin ETF in detail below.
What is Bitcoin ETF?
A Bitcoin ETF is a financial product allowing investors to gain real-time access to Bitcoin’s price movements without holding the Bitcoin. Investing in these ETFs will not give you direct ownership of the Bitcoins, but you can surely benefit from the spreads. This will ensure that the investors are safeguarded against the opaque crypto exchange mechanism and scandals.
The Bitcoin ETFs are planned to be listed on three major stock exchanges in the USA: the New York Stock Exchange (NYSE), the National Association of Securities Dealers Automated Quotations (NASDAQ), and the Chicago Board Options Exchange (CBOE).
How Will It Impact The Crypto Market?
Soon after the announcement, Bitcoin’s price spiked by one percent, trading at $46,300, crossing the market capitalization of $900 billion. Not only Bitcoin but other crypto assets, such as Ethereum, the second largest crypto token, soared about 10%, while XRP gained about 7%. Other altcoins, including Polkadot, Polygon, Cardano, and Avalanche, were up by 14-20 %.
Various crypto experts and analysts have claimed that the SEC’s approval of Bitcoin ETF is a positive step toward developing the Crypto industry. This approval has also served as a mark of authorization, boosting the industry’s legitimacy.
Vikram Subburaj, CEO of Giottus Crypto Platform, said, “We have already seen an increase in interest and asset prices in the past three months. Such capital inflow into a single asset will have a definite cascading effect on all other digital assets with strong fundamentals.”
Way Forward
The market reacted positively after the Bitcoin ETF approval announcement; various analysts anticipate this will positively impact all the awaiting regulatory approvals. Looking forward, there is a high chance that we will see an Ethereum ETF soon.
