🤔 What happened? The U.S. Securities and Exchange Commission (SEC) yesterday greenlit the listing and trading of 11 spot #Bitcoin exchange-traded funds (ETFs) from notable issuers like Bitwise, Grayscale, Hashdex, BlackRock, Valkyrie, BZX, Invesco, VanEck, WisdomTree, Fidelity, and Franklin. A long-awaited move.
🤷♂️ Why is it important? The approval of Bitcoin ETFs opens the gates to a broader audience, particularly institutional investors such as companies, insurance firms, and pension funds. While these institutional investors could theoretically have held Bitcoin directly already, ETFs ease practical and regulatory hurdles, managing risks and custody of Bitcoin that exist with direct investments. Thus, the potential market size of Bitcoin substantially increases due to availability of ETFs. This historic approval, with 11 ETFs issued simultaneously, solidifies Bitcoin’s position as a cornerstone asset in a novel asset class.
🤔 What now? Trading for these ETFs kicks off today (Thursday), with experts anticipating substantial inflows. Bloomberg experts estimate initial inflows reaching up to $4 billion on the first day – expected to also stepwise increase over the next months. As a point of reference, gold ETFs have a total volume of approximately $100 billion today.
🤨 Is the „Wallstreetification of Bitcoin“ against its ethos? Bitcoin was established in 2008 as an instrument intended to operate independently of the state, offering an alternative to the conventional financial system. Now, it is becoming integrated into traditional finance. Isn’t that ironic? I believe it is, indeed. However, there’s a significant caveat – everyone has their own choice regarding how to invest in Bitcoin. If one prefers a traditional market product like an ETF, they can acquire it through conventional brokers. Alternatively, for those who wish to engage with Bitcoin in its original sense, they can purchase Bitcoins, safeguard them in self-custodial wallets, and operate outside the confines of the traditional financial system. The decision is yours, and I’m a strong advocate for having choices. Another positive aspect is that some ETF issuers have committed to supporting funding for the development of the (open-source) Bitcoin protocol, which is also excellent news for Bitcoin.
😊 Why is it significant for me personally? I started my Bitcoin journey in 2016 when it was a highly niche subject met with considerable skepticism. Many questioned why I chose to dedicate my time and enthusiasm to such a topic. Taking the risk, I decided to pursue a PhD in digital currencies and work full-time in the space. I always held a strong conviction that it was the right path. However, a crucial lesson I learned along the way is that you need unwavering belief and a resilient mindset. Throughout the journey, numerous discussions aimed to divert me from my course. How does this connect to the ETF approval? I believe the ETF approval ultimately validates Bitcoin as a crucial component of an entirely new asset class. Even skeptics should now acknowledge that Bitcoin is here to stay. So, my key takeaway was this: If you believe in something that has the potential to revolutionize the world, trust in it, trust your instincts regarding its disruptive potential, and don’t allow others to derail your path, while staying open-minded.
📎Source of ETF approvals: https://www.sec.gov/files/rules/sro/nysearca/2024/34-99306.pdf