The Potential Approval of a Bitcoin ETF Spurs Price Surge
The price of bitcoin has seen a significant surge in 2023 as investors eagerly await approval for the first U.S. spot bitcoin exchange-traded fund (ETF). This approval would be a milestone for cryptocurrency investors, according to experts. In early December, the digital currency surpassed $44,000 for the first time since April 2022, with year-to-date gains exceeding 160% as of December 21. The optimism surrounding a spot bitcoin ETF has been the main driver behind this growth.
Approval Could Be Imminent
Discussions between the Securities and Exchange Commission (SEC) and asset managers hoping to list bitcoin ETFs have progressed to technical details, indicating that an approval could be on the horizon. More than a dozen firms, including BlackRock, WisdomTree, and Valkyrie, are eagerly waiting for the SEC’s green light. This approval could come as early as January.
Potential Benefits of a Spot Bitcoin ETF
If approved, a spot bitcoin ETF would be an excellent investment product for ETF investors. Currently, U.S. investors can only buy bitcoin futures ETFs, which are based on futures contracts rather than direct ownership of the digital asset. A spot bitcoin ETF would provide investors with direct exposure to bitcoin.
Anticipated “Batch Approval”
If the SEC approves a spot bitcoin ETF, it is expected that multiple ETF listings will be approved on the same day. Bryan Armour, director of passive strategies research for North America at Morningstar, predicts that the SEC will review spot ETF applications holistically due to their similar approaches. Armour expressed optimism about a bitcoin ETF and expects positive signs from the SEC.
Potential Impact on Bitcoin Price
Upon approval, some crypto investors anticipate a bitcoin rally. However, it is also possible that the price may dip as investors sell to collect profits. It remains uncertain how the market will react.
Cryptocurrency as an “Extremely Volatile” Asset
While the approval of a spot bitcoin ETF may make cryptocurrency more accessible, experts caution investors to consider their risk tolerance and goals. Ben Smith, a certified financial planner, suggests that aggressive investors with a higher risk appetite may consider adding a spot bitcoin ETF to their diversified portfolio. However, due to its extreme volatility and speculative nature, it is recommended to limit cryptocurrency exposure to a small portion of one’s allocation.
Hot Take: SEC Approval of Spot Bitcoin ETF Could Revolutionize Crypto Investing
The potential approval of a spot bitcoin ETF by the SEC has sparked excitement among cryptocurrency investors. If approved, this would be a significant milestone for the industry, providing investors with direct exposure to bitcoin. The surge in bitcoin’s price leading up to the potential approval demonstrates the market’s optimism. However, it is important for investors to exercise caution and carefully assess their risk tolerance before diving into cryptocurrency investments. While a spot bitcoin ETF could revolutionize crypto investing, it is crucial to remember that cryptocurrency remains an extremely volatile asset class.
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