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In a landmark decision, the Securities and Exchange Commission (SEC) has finally approved several applications for Bitcoin spot exchange-traded funds (ETFs), allowing these funds to be listed and traded on major US stock exchanges.
The approval marks the first time the SEC has greenlit funds that directly hold Bitcoin, rather than futures contracts tied to the cryptocurrency. After rejecting many applications in the past decade, the SEC has finally opened the door to direct Bitcoin investment vehicles for both retail and institutional investors.
Today the SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges.
The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection. pic.twitter.com/oJinqv0wcR
— U.S. Securities and Exchange Commission (@SECGov) January 9, 2024
The floodgates are now open for fund providers to bring spot Bitcoin ETFs to market. Several asset managers have applications already on file with the SEC, including heavyweights like BlackRock, Fidelity, and ARK Invest. With Bitcoin trading around $46,000 on Tuesday, first movers are eager to capitalize on pent-up investor demand.
Industry analysts widely expect spot Bitcoin ETFs to see massive inflows from both cryptocurrency enthusiasts and conventional investors seeking Bitcoin exposure. VanEck estimates over $2.4 billion will pour into spot Bitcoin ETFs in the first quarter of 2024 alone. In five years, Bitwise predicts these funds may hold up to $72 billion in total assets.
These optimistic projections are based on the enthusiastic response that greeted Bitcoin futures ETFs when they debuted last year. The ProShares Bitcoin Strategy ETF (BITO) attracted $1.5 billion in just one-month post-launch.
However, some analysts caution the hype leading up to SEC approval may result in a “sell the news” pullback for Bitcoin prices in the near term. The launch of previous Bitcoin investment vehicles, like CME futures and the Coinbase direct listing, were followed by sharp cryptocurrency declines as investors took profits.
