On November 11th, Beijing time, the U.S. Securities and Exchange Commission (SEC) officially approved the listing and trading of Bitcoin Exchange-Traded Funds (ETFs), a decision that marks a significant regulatory recognition of the cryptocurrency market in the United States and opens up a more convenient investment avenue in digital assets for global investors.
The Bitcoin ETFs authorized by the SEC will be listed for trading on national securities exchanges registered in the United States. The list of approved issuers includes well-known financial institutions such as Ark 21 Shares, Bitwise, BlackRock, Fidelity, Franklin Templeton, Grayscale, Hashdex, Invesco, WisdomTree, Valkyrie, and VanEck.
Reflecting on the journey, since the Winklevoss brothers first attempted to launch a Bitcoin trust fund in July 2013, the SEC had repeatedly denied similar applications due to concerns over market manipulation. However, a turning point came last year when BlackRock, one of the world's largest asset management companies, filed for a spot Bitcoin ETF, and Grayscale Investments won a legal battle against the SEC. These two pivotal events played a crucial role in ultimately persuading the SEC to approve the spot Bitcoin ETFs.
This decision has significantly resonated within the market. Following the announcement, Bitcoin’s price experienced a brief fluctuation before surging to $47,500. Simultaneously, the stock price of Grayscale Bitcoin Trust (GBTC) soared to $40, its highest point since December 2021. Furthermore, as the possibility of an Ethereum spot ETF approval increases, Ethereum’s price also rose by 11%, surpassing $2,500 for the first time.
Market analysts are optimistic about the future impact of these spot Bitcoin ETFs. Analysts from VanEck predict that these ETFs could attract up to $1 billion in capital inflows in the initial days, while Matt Hougan, Chief Investment Officer at Bitwise, estimates that they could attract up to $55 billion in net inflows over the next five years.
The SEC is currently reviewing the registration statements for 10 spot Bitcoin ETPs, aiming to create a fair competitive environment for issuers, which in turn promotes fairness and competition in the market, benefiting investors and the broader market. These Bitcoin ETFs are expected to be traded on various stock exchanges, including NASDAQ, NYSE Arca, and Cboe BZX.
Compared to traditional ETF products, these Bitcoin ETFs adopt a cash creation/redemption mechanism instead of physical Bitcoin. This approach is likely intended to alleviate the SEC's concerns about potential price manipulation of Bitcoin. Nevertheless, the introduction of Bitcoin ETFs undoubtedly injects new vitality into the mainstream North American financial market, enabling institutional and individual investors to invest in this trillion-dollar-valued digital asset without directly holding Bitcoin.
Analysts from Standard Chartered Bank anticipate that Bitcoin ETFs could attract between $50 billion to $100 billion this year, potentially driving the price of Bitcoin up to $100,000. To enhance the appeal of these potential products, several issuers have submitted proposals to the SEC for reduced management fees.
This approval not only broadens the acceptance of the cryptocurrency market but also provides investors with a more diverse range of investment options. With this historic decision, the Bitcoin and broader cryptocurrency market are poised for a new phase of development.
