Global Markets

Bitcoin achieves major milestone as US SEC approves first-ever spot Bitcoin ETFs – Trevor Jennewine

Bitcoin (BTC 5.27%) has just achieved a historic milestone. The U.S. Securities and Exchange Commission (SEC) granted approval for the first-ever spot Bitcoin Exchange-Traded Fund (ETFs), marking a significant moment for Bitcoin and the wider cryptocurrency market. A total of 11 issuers received the green light from the SEC for their applications. Some of these issuers, along with their respective fund names and proposed ticker symbols, are listed below.

  • ARK 21shares Bitcoin ETF (ARKB),
  • Fidelity Wise Origin Bitcoin Fund (FBTC),
  • Franklin Bitcoin ETF (EZBC),
  • Invesco Galaxy Bitcoin ETF (BTCO),
  • Vaneck Bitcoin Trust (HODL),
  • Wisdomtree Bitcoin Fund (BTCW),
  • Bitwise Bitcoin Trust (BITB),
  • Ishares Bitcoin Trust (IBIT),
  • Valkyrie Bitcoin Fund (BRRR),
  • Hashdex Bitcoin ETF (DEFI),
  • Grayscale Bitcoin Trust (GBTC).

These institutions hold great significance as they collectively manage over $10 trillion in assets. This means that their spot Bitcoin ETFs are well-positioned to attract both retail and institutional investors. Interestingly, all the issuers listed, except for Ark Invest, rank among the top 15 asset managers globally, with BlackRock being the largest.

The approval of spot Bitcoin ETFs is a monumental event. While the SEC had already approved Bitcoin futures ETFs in 2021, these funds invest in Bitcoin futures contracts rather than directly owning Bitcoin. As a result, they do not precisely track the price of the cryptocurrency. For example, the largest Bitcoin futures ETF, ProShares Bitcoin Strategy ETF (NYSEMKT: BITO), returned 103% over the past year, while Bitcoin itself surged by 170%.

Spot Bitcoin ETFs operate differently. Issuers will purchase Bitcoin to create the fund and then sell shares on the stock market. These shares will accurately reflect the price of Bitcoin, providing investors with direct exposure to the cryptocurrency without the complexities of buying and storing it. By eliminating barriers to entry, spot Bitcoin ETFs have the potential to attract more investors and capital, thereby driving the price of Bitcoin even higher.

In fact, analysts at Bernstein predict that Bitcoin could triple in value by the end of 2025, while analysts at Standard Chartered Bank believe its price could quadruple during that same period. Other financial professionals are even forecasting even greater upside potential.

Spot Bitcoin ETFs have the potential to create a surge in demand from both retail and institutional investors. As we know, the value of any asset is determined by the balance between supply and demand. In the case of Bitcoin, with its limited supply of 21 million coins, demand becomes the crucial factor. The approval of spot Bitcoin ETFs marks a significant milestone, as it could lead to a substantial increase in demand.

The involvement of major financial institutions like BlackRock and Fidelity as issuers of these ETFs adds further credibility and attractiveness to the market. One of the key advantages of spot Bitcoin ETFs is that they eliminate many of the barriers that investors face when dealing with cryptocurrencies. No longer will investors need to navigate the complexities of cryptocurrency exchanges or worry about securely storing their Bitcoin. Instead, they can conveniently add Bitcoin exposure to their existing portfolios through traditional brokerages.

Analysts are optimistic about the potential impact of spot Bitcoin ETF approval on the price of Bitcoin. Gautam Chhugani, an analyst at Bernstein, believes that the approval could drive the price of Bitcoin to $150,000 by 2025, representing a significant upside of 230%. Geoff Kendrick from Standard Chartered Bank is even more bullish, predicting a price of $200,000 by 2025, implying a 340% upside.

However, the most optimistic outlook comes from Anthony Scaramucci, the founder of SkyBridge Capital. He believes that spot Bitcoin ETF approval could attract a staggering $100 billion in institutional investments, propelling the price of Bitcoin to $330,000 in the near future. This would result in an impressive upside of 625%. Scaramucci specifically highlights the BlackRock ETF as a compelling option, given BlackRock’s status as the largest asset manager globally.

Overall, the approval of spot Bitcoin ETFs has the potential to revolutionize the market and significantly impact the price of Bitcoin. With the involvement of major financial institutions and the convenience they offer to investors, the demand for Bitcoin could experience a substantial boost.

Investors should always exercise caution when it comes to price targets and the volatile nature of cryptocurrency. However, with the recent approval of spot Bitcoin ETFs by the SEC, some of the uncertainty surrounding the asset class has been alleviated. This could potentially attract more capital to Bitcoin and drive its price higher in the long run.

But before you jump into investing $1,000 in Bitcoin, it’s worth considering the insights of the Motley Fool Stock Advisor analyst team. They have identified what they believe are the 10 best stocks for investors to buy now, and Bitcoin didn’t make the cut. These selected stocks have the potential to generate significant returns in the years to come. So, it might be wise to explore other investment opportunities alongside Bitcoin. SOURCE: The Motley Fool. By Trevor Jennewine

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