Investors in the cryptocurrency market are becoming increasingly confident that the United States Securities and Exchange Commission (SEC) will soon give the go-ahead for an exchange-traded fund (ETF) that invests directly in Bitcoin (BTC-USD). This has been reflected in the price of Bitcoin itself, which has grown by 35% in the last month.
Advocates of a spot Bitcoin (BTC-USD) ETF argue that its approval would make Bitcoin investing more accessible to a wider range of investors and help it to become a more widely accepted asset class. Coinbase Global (COIN) reported that, if approved, the ETF could open crypto markets to traditional finance participants such as Registered Investment Advisors (RIAs), retirement funds, and other institutions.
The long-term impact of a spot Bitcoin (BTC-USD) ETF could be huge, as the overall crypto market cap is currently $1.38T. It is thought that this kind of ETF could bring billions of dollars into the crypto market, whilst also providing the basis for a more regulated environment and greater inclusion.
In addition, the approval of this ETF could lead to more products being available, such as lending, futures, and options. This would widen access to accredited investors and expand adoption.
Although J.P. Morgan analyst Nikolaos Panigirtzoglou observed that ETFs listed in Europe and Canada have so far not been popular with investors, BlackRock (BLK) is among the biggest Wall Street firms awaiting approval for a spot BTC ETF. This ETF would allow investors to benefit from Bitcoin (BTC-USD) without having to own it directly. Other companies in the running to launch the product in the US include WisdomTree, Valkyrie, Ark Invest and Invesco (IVZ).
When BlackRock (BLK) filed for their ETF in mid-June, Bitcoin (BTC-USD) surged from around $26K to just over $30K. It is currently trading at sub-$36K. The surge highlights the growing optimism about the potential approval of a spot BTC ETF.
Coinbase (COIN) believes that at least one spot BTC ETF could be approved before the end of the year. The SEC has until January 10th 2024 to make a decision on the ARK-21Shares Bitcoin ETF application.