The US Securities and Exchange Commission (SEC) has approved 11 applications for the first US-listed exchange-traded funds (ETFs) that track Bitcoin. This is a significant development for the world’s largest cryptocurrency and the broader crypto industry, according to Gary Gensler, the Chair of the SEC.
The approved applications come from BlackRock, Ark Investments/21Shares, Fidelity, Invesco, VanEck, and others. These ETFs are expected to start trading as early as Thursday, creating a fierce competition for market share.
After a decade in the making, the approval of these Bitcoin ETFs is a game-changer for the cryptocurrency. They offer both institutional and retail investors exposure to Bitcoin without having to directly hold it.
Analysts at Standard Chartered predict that these ETFs could attract $50 billion to $100 billion in investments this year alone, potentially driving the price of Bitcoin as high as $100,000. However, other analysts believe that the inflows will be closer to $55 billion over the next five years.
Andrew Bond, managing director and senior fintech analyst at Rosenblatt Securities, sees this as a huge positive for the institutionalization of Bitcoin as an asset class. He believes that the ETF approval will further legitimize Bitcoin.
Following the news, the price of Bitcoin rose by 3% to $47,300. The cryptocurrency has already surged over 70% in recent months in anticipation of the approval, reaching its highest level since March 2022 earlier this week.
Success in acquiring assets for spot Bitcoin ETFs will depend on fees and liquidity. Some issuers have even lowered their fees in new filings this week to attract investors. These fees range from 0.2% to 1.5%, with some firms waiving fees entirely for a certain period of time.
For short-term speculators, liquidity is more important than fees. The more liquid an ETF is, the easier it is for investors to buy and redeem shares at prices that closely track the actual price of Bitcoin.
Companies are also expected to heavily market these ETFs, with a flurry of online advertisements and other forms of promotion. Some issuers, such as Bitwise and VanEck, have already released advertisements promoting Bitcoin.
Steven McClurg, the chief investment officer at Valkyrie, whose ETF was among those approved on Wednesday, commented on the unprecedented situation where 10 of the same ETFs were launched on the same day.
The news of the ETF approval was greeted with agency inputs and is expected to be a significant development for the crypto industry.