Crypto enthusiasts are rebuilding their faith in the industry after an unpleasant bear market experience, as Bitcoin continues to show resilience as an investment asset.
After more than a decade of planning and one false post on X Tuesday the Securities and Exchange Commission finally approved spot ETFs for bitcoin, giving investors exposure without directly purchasing from an exchange and holding it in digital wallet.
The SEC’s approval
Crypto investors have long anticipated exchange traded funds (ETFs), providing access to cryptocurrencies without directly owning each coin, without incurring substantial transaction costs. On Wednesday, the SEC approved 11 spot bitcoin ETFs which marked an important step forward for crypto investing.
At BlackRock’s Crypto Fund IPO filing this year, optimism about ETFs was revived, prompting rivals to follow suit and submit applications of their own for crypto funds. A series of meetings and amended S-1 filings gave rise to optimism regarding approval processes – although that still needs confirmation by authorities.
Approvals will open up cryptocurrency investments to mainstream investors who may have been deterred by price swings and an incomplete understanding of underlying technology, while at the same time placing pressure on issuers to compete among themselves for capital – something Standard Chartered estimates could push prices over $100,000; although SEC did not comment directly on that prediction; instead they noted that any incorrect tweet posted by an unauthorised person on an exchange’s account wasn’t made directly by them but by another source.
The next halving
Future predictions indicate a number of factors could drive bitcoin prices higher. One critical event could be the next halving, which occurs every four years and reduces mining rewards in half, thus restricting supply of bitcoin and often leading to price spikes.
In April 2024, another Bitcoin reward halving is expected, decreasing from 12.5 bitcoins to 6.25. Fundstrat predicts this event will cause prices to skyrocket by as much as $180,000 as a result of increased supply versus demand dynamics.
CNBC spoke with several crypto executives who agree that ETF approval and the forthcoming halving are both positive developments for digital assets, although they cautioned these events may not significantly drive prices higher immediately; rather, these events will bring more institutional capital to the space, they said. According to Bloomberg Intelligence ETF analyst James Seyffart’s estimates, 13 spot bitcoin ETF applications currently await SEC approval – BlackRock (BLK), ARK Invest, VanEck and Fidelity Investments among them among these potential issuers.
A spot EFT launch
Spot ETFs will make it easier for mainstream investors to gain exposure to crypto by investing directly through their brokerage accounts, potentially drawing many of those who had held off investing directly until now, further legitimizing Bitcoin and similar cryptos among investing public.
On Thursday, the inaugural Bitcoin funds will likely launch. Competition among issuers to offer these investments has already become fierce; each trying to stand out with reduced fees or marketing campaigns. BlackRock, one of the world’s leading asset managers, may lead the pack with their Grayscale Bitcoin Trust (GBTC).
Investors can expect more exchange-traded funds (ETFs) to follow Ark Invest and 21 Shares’s example, as many would-be issuers have filed applications with the SEC that are currently under review. Launching an ETF involves filing a 19b-4 application with them, waiting 45 days to review it, then being granted listing and trading status by regulator.
The future
No matter whether a person is investing in Bitcoin or simply following cryptocurrency trends, striking a balance between greed and caution should always be of prime importance when engaging in any aspect of cryptocurrency – particularly given its often volatile nature that can quickly shift between bullishness and bearishness.
Many view the approval of spot ETFs as a turning point for cryptocurrency, ushering it deeper into mainstream investing while legitimizing an often volatile sector.
BlackRock’s investments will likely have far-reaching ramifications that extend well beyond US markets. Should other asset management firms follow BlackRock’s lead and inject capital, their capital could influence price movements across other global markets and propel Bitcoin past $100000 by 2024 – though such predictions should still be treated as premature as their path may not be straightforward.
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