The Securities and Exchange Commission approved 11 spot bitcoin ETFs for trading in the US Wednesday.
The regulator’s move makes buying the token much easier for mainstream investors.
Its price has climbed 70% since October, and crypto bulls expect the decision to power it to further gains.
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The US’s top financial watchdog on Wednesday approved 11 exchange-traded funds that track the price of bitcoin, meaning it’ll now be much easier for mainstream investors to buy the cryptocurrency.
The Securities and Exchange Commission’s announcement officially brings big, institutional players such as BlackRock and Fidelity into the digital-asset space for the first time — and bulls hope their spot bitcoin ETFs can help the large-cap token to extend the stellar run it’s been on since October.
Here’s everything you need to know.
The SEC — the arm of government responsible for regulating financial markets — said in a statement Wednesday that it would approve 11 spot bitcoin ETFs proposed by asset managers including BlackRock, Fidelity, the crypto-investment firm Grayscale, and Cathie Wood’s ARK Invest.
Just 24 hours earlier, the agency said on X that it had given the funds the greenlight. It deleted the “unauthorized” post 15 minutes later, saying its account had been compromised.
Over the past few months, speculation that the watchdog would approve the spot ETFs powered bitcoin to stellar gains. Since October, the token has climbed 70% to top $46,000.
The SEC’s chair, Gary Gensler, said in a separate statement Wednesday that he’s still skeptical about the cryptocurrency, which he called “primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.”
What is a spot bitcoin ETF?
ETFs are baskets of securities sold on stock exchanges. They’re designed to give investors a straightforward route into an asset class without requiring them to hold the asset directly.
For example, if you bought a share in BlackRock’s iShares Gold Trust, which trades on the NYSE Arca exchange under the ticker IAU, you’d gain exposure to the price of bullion — but wouldn’t have to worry about transporting or storing it.
Similarly, the SEC’s approval of spot bitcoin ETFs means that investors can now buy assets that track the token’s price without having to open an account with a crypto exchange or go through the complex process of setting up a digital wallet.
The products are also more accessible for big-name institutional investors who previously steered clear of bitcoin because they didn’t feel comfortable buying an unregulated asset.
How is the crypto market reacting?
Analysts believe SEC approval can help bitcoin extend its strong recent run. Fundstrat’s Tom Lee has predicted that spot ETFs will lift the cryptocurrency to $150,000 within 12 months, while Standard Chartered says it could surge over 300% to hit $200,000 by the end of 2025.
But market reaction to the watchdog’s move has been low-key so far, with the token edging up less than 1% in early-morning trading Thursday. That could reflect investors “buying the rumor and selling the news” after speculation about a spot fund helped it outperform the S&P 500 and the “Magnificent Seven” group of megacap tech stocks in 2023.
Still, crypto experts told Business Insider that news of a spot ETF would likely fuel further gains for bitcoin — and could pave the way for the approval of products tracking the price of other crypto assets, including ether, the native token of the ethereum blockchain.
“I think it’s an excellent thing for bitcoin bulls in the short term — I’ve never been as bullish as this,” Carol Alexander, an economist at the UK’s University of Sussex, said.
“Depending on how skillful BlackRock and Fidelity are at containing the volatility, it could go up to $100,000” by the end of 2024, she added.
Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), during an interview in Washington, DC, US, on Thursday, July 27, 2023. Andrew Harrer | Bloomberg | Getty ImagesSecurities and...