Spot Bitcoin ETFs have finally been approved in the US after a tough decade of trials. The next step: getting you to act on Thursday morning.
After being given the green light by the Securities and Exchange Commission on Wednesday afternoon, the highly anticipated products will launch in U.S. markets managed by the NYSE, Cboe Global Markets and Nasdaq, backed by major trading firms looking to provide liquidity.
Buying and selling could technically begin as early as 4 a.m. ET (09:00 UTC), since that's when U.S. stock markets open – rather than the famous daily opening ceremonies that take place 5½ hours later.
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The products enable virtually any retail customer to gain access to the price of Bitcoin (BTC) through their traditional brokerage apps and accounts, and enable traditional financial institutions to invest without having to use crypto exchanges.
These ETFs offer more choices for investors interested in digital assets, said Cynthia Lo Bessette, head of digital asset management at Fidelity, one of the Bitcoin ETF issuers. The latest products differ from Bitcoin futures ETFs approved in the US in 2021, which invest in derivatives rather than the digital asset itself.
“We have long believed that a spot-priced exchange-traded product would be an efficient way for investors to gain exposure to Bitcoin,” she said. “As a company, we remain committed to meeting growing demand from investors by providing them with tools to support their decisions and facilitate safe access to markets.”
Similarly, a spokesperson for Cboe Global Markets said the ETFs would provide investors “a transparent and regulated” way to track the price of Bitcoin. “The approval represents a major step forward in establishing cryptocurrencies as a tradable asset class and paves the way for new trading opportunities.”
With 11 spot Bitcoin ETFs funds on offer – some of which have already amassed billions of dollars in assets upon launch – liquidity providers and market makers have been preparing for this day over the past few months and ensuring that the Bitcoin market exists – and remains – efficient in the face of the new wave of interest that arrives on Thursday.
The Bitcoin spot market, Bitcoin futures markets and Bitcoin futures ETFs will all support spot ETF liquidity from day one, said Douglas Yones, head of exchange traded products at NYSE. The NYSE also has a number of liquidity programs, he said.
“There are natural hedges available to the market makers out there — and we have dozens of market makers that provide liquidity to our ETFs that will step in —,” he said. “We have a very good pricing process that will take place overnight leading up to the IPO on the New York Stock Exchange, so we expect a fairly dynamic and liquid market tomorrow.”
Robert Mitchnick, the head of digital assets at BlackRock, told CoinDesk in an interview that the asset manager would leverage its partnership with Coinbase. The company integrated Coinbase Prime into its own portfolio management tool Aladdin in 2021. While he did not comment on how much BlackRock had committed to assets under management when it launched its Bitcoin ETF, he noted that the company had already announced a seed capital investment of $100,000.
“As is known, there was an initial investment in the ETF made by BlackRock,” he said. “It's really important to understand that we see this as a long process.”
David Mann, head of ETF products and capital markets at Franklin Templeton, said in an interview with CoinDesk that it was difficult to predict what inflows might look like in the first few days. While he expects “a lot of excitement” on day one, he said interest and investment may ramp up more slowly than people expect.
“It wouldn't shock me if ETF users at large who are now seeking some exposure to Bitcoin within the ETF vehicle went through their normal vetting process to ensure they are happy with the ETF, and that takes time “often.” time,” he said.
There could be a “pop out of the gate,” but it could take weeks or months for investors to familiarize themselves with the Bitcoin ETF vehicle and verify that it is behaving as they expect would be to invest money, he said.
BlackRock's Mitchnick echoed that point, saying it will be a “long road” for investors post-launch. As an example, he cited financial advisors who may be part of the largest investment channel for the ETF. Since they have not had much exposure to investment vehicles containing Bitcoin, they would have to go through “an educational journey” before they could allocate funds.
“There will be suitability interviews between consultants and customers,” he said. “That won’t happen immediately, and the same goes for institutional investors who haven’t had any real viable engagement solutions.”
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