Bitcoin ETFs coming soon: what could happen?

アップデート済

Hello, folks! If this is your first time reading one of my ideas, welcome, hope you enjoy it. If you are a regular visitor of my ideas, thank you!

Let's discuss the fuss around Bitcoin Exchange-Traded Funds (ETFs). With 8 Bitcoin ETFs awaiting regulatory approval, decisions are anticipated between January and March 2024, let's consider how this could shake up Bitcoin's price, the wider crypto market, investor confidence, and the overall financial scene.

🧙🏽‍♂️Spot ETFs: A Direct Link to Bitcoin's Supply
SPOT ETFs are unique because they require the actual holding of Bitcoin by the fund. In an environment where Bitcoin's availability on exchanges is at an all-time low, these ETFs could significantly influence the market's supply-demand dynamics.

The approval of SPOT ETFs is likely to ramp up demand significantly. Given Bitcoin's capped supply, this increased demand could lead to substantial price surges, potentially setting new all-time highs.

🧙🏽‍♂️Investor Sentiment: A Confidence Boost
For investors, SPOT ETFs represent a more secure, regulated path to Bitcoin investment. This could draw in a fresh wave of investment, both from retail and (more importantly) institutional sectors, think pension funds for example. This could potentially result in elevating Bitcoin's price and market stability in a way never seen before.

🧙🏽‍♂️The Financial Landscape: Embracing Digital Currencies
On a larger scale, SPOT ETFs indicate a significant stride in incorporating cryptocurrencies into mainstream finance. This move could spark further innovation and adoption of digital currencies in diverse financial services. While some banks are now known to block transactions related to crypto, or even entire accounts, it's not unimaginable that they will start offering crypto services themselves. An approval of several ETFs would incorporate crypto into Wall Street.

🧙🏽‍♂️The First-Mover Scenario: A Case for Simultaneous Approval
In the realm of these ETF applications, the potential for a first-mover advantage looms large. Here's a breakdown of the key players and their decision dates:

Ark/21 Shares Bitcoin Trust: 1/10/24
Bitwise Bitcoin ETF Trust: 3/15/24
BlackRock Bitcoin ETF Trust: 3/16/24
VanEck Bitcoin Trust: 3/16/24
WisdomTree Bitcoin Trust: 3/16/24
Valkyrie Bitcoin Fund: 3/16/24
Invesco Galaxy Bitcoin ETF: 3/16/24
Fidelity Wise Origin Bitcoin Trust: 3/16/24

If one of these ETFs gets approval ahead of the others, it could dominate investor interest. To avoid this and foster a healthier, more competitive market, regulators might consider approving multiple ETFs simultaneously, ensuring no single fund unfairly corners the market. This means that we might see approval of several ETFs in January 2024, less than 2 months from now!

🧙🏽‍♂️Conclusion: A Turning Point for Crypto?
The potential approval of Bitcoin SPOT ETFs marks a pivotal moment in the crypto narrative. It's a validation of Bitcoin's growing influence and a beacon for a more inclusive crypto market. For the crypto community, it's a period of pride and anticipation; for cautious investors, a new pathway into the crypto realm; and for the financial world, a step toward embracing the digital currency era.

Let's eagerly watch together how this story unfolds. Here's to the dynamic and ever-evolving world of cryptocurrencies! 🥂🚀🌕

❓Questions for you:

What do you think will happen?
Do you expect one or more ETFs to be approved in January?
What do you think will be the effect on price of that happening?
How will you trade/invest based on your expectations?

Leave your answers to these questions in the comments below.

Oh, and if you enjoyed reading this, like/boost, follow and shares are highly appreciated!

ノート

News update:

"Further analyzing the situation, Seyffart hypothesized on X about the SEC’s broader strategy: “This delay on Hashdex all but confirms for me that this was likely a move to line every applicant up for potential approval by the Jan 10, 2024 deadline.” He cautioned, however, that this is only for the 19b-4 approvals and that the SEC is not yet ready to approve the S-1s, adding, “So approval could happen here without immediate launch. They could still be denied.”"

source: bitcoinist.com/bitcoin-etf-approval-sec-january-2-10/

"Commissioner Peirce reiterated her transparent stance regarding spot Bitcoin ETF, stating there is no valid reason for the SEC to impede the approvals.

Highlighting the numerous applications submitted to the SEC, Peirce expressed her belief that these ETFs should be given the green light. While enforcement actions and litigation are part of the SEC’s regulatory toolkit, Commissioner Peirce preferred a more proactive approach, urging the exploration of alternative tools to foster innovation and compliance in the crypto industry. "

source: bitcoinist.com/bitcoin-etf-gets-nod-from-sec-commissioner/

ノート

BlackRock meets with SEC ... in-kind or cash Bitcoin ETF, that is the question.
en.bitcoinsistemi.com/blackrock-officials-met-with-sec-officials-again-today-for-bitcoin-spot-etf-here-are-the-meeting-details/

ノート

"The prospect of a U.S. Bitcoin ETF could potentially open up a market size of $14 trillion within a year of its launch, expanding to $39 trillion in the third year, according to estimates from Galaxy Digital."

Source: cryptopolitan.com/spot-bitcoin-etf-affect-price-volatility/

ノート

A lot of financial analysts and watchers in the space are expecting a similar outcome as what I outlined in this idea:

Industry watchers pin down possible bitcoin ETF approval dates
Recent SEC filings suggest the regulator could be lining up the approval of multiple proposals in early January, segment observers argue.

Potential approval date for multiple sport bitcoin ETFs between Jan 8th-10th

source: blockworks.co/news/pinning-down-bitcoin-etf-approval-dates

ノート

Does Google know more? 🤔
I wouldn't be surprised.

"Alphabet Inc’s search engine arm, Google, has revised its ad policies concerning “crypto trusts.” This comes ahead of the potential approval of Bitcoin spot ETF applications by the Securities and Exchange Commission (SEC)."

benzinga.com/markets/cryptocurrency/23/12/36189898/google-revamps-ad-rules-for-crypto-trusts-amid-optimism-surrounding-bitcoin-spot-etf

ノート

BlackRock Inc. has revised its application for a spot in Bitcoin ETF, aiming to facilitate participation by U.S.-regulated banks.
The updated proposal allows banks to become “authorized participants,” using broker-dealers to convert fiat currency into Bitcoin.
This new structure ensures banks can engage in cryptocurrency investments without holding digital assets directly, adhering to regulatory compliance.

More: cryptopolitan.com/blackrock-revamps-bitcoin-etf/

ノート

BlackRock has revised its application once again, moving to a cash application rather than in-kind. I asked ChatGPT what this means and here is the explanation:

A cash-based spot Bitcoin ETF works differently from traditional Bitcoin ETFs in terms of its creation and redemption process. Typically, a spot Bitcoin ETF tracks the price of Bitcoin by holding physical bitcoins in its portfolio. When an investor buys shares of a spot Bitcoin ETF, they are essentially buying a portion of the Bitcoin held by the fund. This means that investors don't own Bitcoin directly but own a share of the ETF that represents a certain amount of Bitcoin. The value of a spot Bitcoin ETF will be directly correlated to the price of Bitcoin.
Source: etf.com/sections/etf-basics/spot-bitcoin-etfs-new-frontier

However, the U.S. Securities and Exchange Commission (SEC) has shown a preference for a cash creation model over the traditional in-kind method for spot Bitcoin ETFs. In a cash creation model, instead of providing assets like Bitcoin in exchange for ETF shares, institutions would use cash to acquire these shares. This change simplifies transactions, potentially enhancing privacy and reducing restrictions in the ETF ecosystem. It also means that the ETF issuer handles Bitcoin dealings directly, which simplifies the process for brokers and intermediaries who might otherwise have to deal with the complexities associated with handling Bitcoin.
Source: finbold.com/different-spot-bitcoin-etf-models-what-will-the-sec-pick/ and cryptopolitan.com/sec-hints-at-preference-for-cash-bitcoin-etf/

This preference for cash-based creations marks a significant departure from the traditional approach of using assets like Bitcoin for ETF shares. The implications for ETF applicants are considerable, as this approach could change how these financial products operate, especially in terms of transaction privacy and the reduction of overall restrictions in the ETF ecosystem. The SEC's preference for cash creations is seen as a progressive stance towards a regulatory pathway for these products.
Source: cryptopolitan.com/sec-hints-at-preference-for-cash-bitcoin-etf/

ノート

Imagine the scene next week ..

ノート

This is it guys, tomorrow or Wednesday at the latest the SEC has to come out with their decision on the ARK Bitcoin ETF (and potentially a number of others).

Meanwhile, BTC has arrived at the next resistance zone, which is most likely going to be blasted through if we see a positive decision from the SEC.

ノート

LOL ... You can't make this sh#t up ...
A tweet is published from the official SEC account that all ETFs are approved.
30 mins later Gary Gensler tweets that the account was "compromised" and that no ETFs have been approved (yet). The tweet in question is removed.

Most likely it was a draft that was accidentally published ahead of time, no way someone hacked the account and it could be recovered within the hour.

Nevertheless, the "official" decision should be announced today ..
Stay focused!

ノート

SEC approves 11 ETF Funds.
That's it guys, welcome to a new chapter for Bitcoin.
A chapter where Bitcoin is recognized by TradFi as a new asset class and Financial Advisors have the fiduciary duty to inform their customers about this option.
What will this mean for Bitcoin? I'll consider writing a new idea for this. Stay tuned!