The Securities and Exchange Commission (SEC) has granted approval for 11 bitcoin Exchange Traded Funds (ETFs), signifying a pivotal moment for the cryptocurrency realm and a gateway for novel investors.
In a notable move, the US securities regulator greenlit the inaugural US-listed ETFs designed to trail bitcoin, marking a watershed occurrence for the largest cryptocurrency globally and the expansive crypto industry.
The revelation unfolded amid a tumultuous 24-hour period for the favored cryptocurrency. A tweet from the Securities and Exchange Commission (SEC) account declared the long-anticipated ETF approval on Tuesday, prompting a surge of over $1,000 in bitcoin's value. Subsequently, the SEC asserted its account had been "compromised," labeling the tweet as "unauthorized."
However, by Wednesday, the SEC officially sanctioned the ETFs, underscoring its lingering skepticism towards cryptocurrencies.
What has gained approval ?
The SEC has given the green light to 11 bitcoin ETFs in the United States, providing a gateway to cryptocurrencies for a myriad of prospective investors who prefer avoiding the complexities associated with acquiring actual bitcoin.
An ETF offers a facile avenue for investing in assets or a cluster of assets without the necessity of direct acquisition. As an illustration, the SPDR Gold Shares ETF empowers individuals to invest in gold sans the obligation to secure storage for a physical bar.
ETFs are also readily tradable on stock exchanges.
Since the advent of bitcoin, ownership required the adoption of a digital wallet or establishing an account with a cryptocurrency trading platform like Coinbase or Binance. Advocates of cryptocurrency contend that this development will propel the once niche and geeky facet of the internet further into financial mainstream consciousness.
The decision to greenlight the ETFs represents a significant triumph for colossal fund managers such as BlackRock, Fidelity Investments, and Invesco, staunch proponents who ardently lobbied for SEC approval.
Some of these products are poised to commence trading as early as Thursday, igniting a fierce competition for market dominance.
What is the SEC's stance?
Despite granting approval for the new ETFs, the SEC maintains a profound skepticism toward cryptocurrencies, emphasizing that this decision neither signifies approval nor endorsement of bitcoin.
Gary Gensler, the agency's chairman, cautioned, “Investors should exercise caution concerning the myriad risks associated with bitcoin and products tethered to crypto values.”
Other commissioners voiced apprehension regarding the SEC's endorsement of these funds.
Commissioner Caroline Crenshaw expressed her dissent, stating, "I am concerned that these products will inundate the markets and find their way into the retirement accounts of US households, exposing them to potential financial losses due to fraud and manipulation prevalent in spot bitcoin markets."
Implications for Bitcoin's Price
Following nearly two years of tumult, witnessing bitcoin's price plunge and the demise of numerous crypto firms, Wednesday's announcement brings solace to many investors in the crypto market.
The regulatory green light, long anticipated over several months, has fueled a 70% surge in bitcoin's price since October. Speculation among crypto investors centers on the widespread adoption of bitcoin ETFs, anticipated to amplify demand for the cryptocurrency.
Having plummeted to as low as $16,000 in November 2022 post the bankruptcy of the FTX crypto exchange, bitcoin was trading at $46,500 in the hours subsequent to the SEC announcement.
Analysts at Standard Chartered posit that these ETFs could attract $50 billion to $100 billion this year alone, potentially propelling bitcoin's price to $100,000. Alternative projections suggest inflows closer to $55 billion over a span of five years.
While some analysts exercise caution, contending that ETFs might serve to stabilize crypto prices by broadening their utility and audience, overarching concerns linger. Critics fear that the widespread adoption of crypto ETFs could inject excessive risk and volatility into the retirement accounts of the American populace. The notorious price volatility of bitcoin, prone to unpredictable fluctuations, could expose mainstream investors to a less familiar array of investment risks, according to Yiannis Giokas, senior director of Moody’s Analytics.
Meanwhile, the price of Ethereum, the second-most popular cryptocurrency, has surged amid speculation that fund managers will develop ETFs around it.
">
0 comments:
Post a Comment