The cryptocurrency world has been waiting with bated breath for the approval of a Bitcoin exchange-traded fund (ETF) by the Securities and Exchange Commission (SEC). This week, that wait finally came to an end when the SEC approved 11 bitcoin ETFs in the United States, making cryptocurrencies accessible to many new investors who do not want to go through the additional processes required to purchase actual bitcoin.
An ETF is a simple way to invest in assets or a portfolio of assets without having to purchase the assets directly. For example, the SPDR Gold Shares ETF allows anyone to invest in gold without needing to find or secure a physical bar.
This marks a major milestone for cryptocurrency adoption and legitimacy. Bitcoin has faced skepticism from regulators like the SEC for years, but the approval of a spot Bitcoin ETF signals that attitudes are clearly shifting. Unlike previously approved Bitcoin futures ETFs, the Valyrie Fund will hold bitcoin directly, allowing for pure and direct exposure to the price movements of the digital asset.
The SEC’s approval is a watershed moment for both the cryptocurrency industry as well as investors. For the first time, retail investors can get exposure to physically-backed bitcoin through brokerage accounts they already have, instead of jumping through hoops to buy the coin directly.
Leah Wald, CEO of Valkyrie Investments
The path to approval has been long and rocky for Bitcoin ETF applicants to date. Over a dozen fund sponsors have previously filed for Bitcoin ETFs only to be rejected or face lengthy delays from the SEC. The Commission cited reasons like lack of regulation around crypto exchanges and worries about market manipulation. But now the SEC seems to finally feel confident enough in both the cryptocurrency market infrastructure as well as the liquidity available to support a spot Bitcoin ETF product.
What does this mean for the price of bitcoin?
The market impact of the first Bitcoin spot ETF is expected to be significant. The launch should open the crypto market up to wider retail and institutional participation, pumping billions of dollars into the space. It is estimated that Bitcoin ETF could attract up to $14 billion in the first year .With increasing mainstream adoption and investment from Wall Street, it’s likely that other companies will follow the lead in launching spot Bitcoin ETFs of their own.
Whatever lies ahead, this week will go down as pivotal in Bitcoin’s short but dramatic history. The SEC’s seal of approval confirms what crypto believers have said all along – that Bitcoin is here to stay as a legitimate asset class and an alternative store of value in institutional portfolios.
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