Bitcoin Investors Anticipate Approval of First US Spot Bitcoin ETF
Bitcoin investors are eagerly awaiting regulatory approval for the first U.S. spot bitcoin exchange-traded fund (ETF), which experts believe could have significant implications for cryptocurrency investors. The price of bitcoin recently reached an 18-month high, surging to $37,970 after BlackRock made initial moves toward an ether ETF. Although bitcoin has more than doubled in value since the beginning of 2023, it is still below its peak in November 2021.
Several asset management firms, including BlackRock, WisdomTree, and Valkyrie, are currently awaiting approval from the Securities and Exchange Commission (SEC) to issue a spot bitcoin ETF. Industry experts predict that the first approval may occur early in 2024.
The Best Product on the Market
If the SEC approves a spot bitcoin ETF, it would be considered the best product for ETF investors. Bryan Armour, Director of Passive Strategies Research for North America at Morningstar, explains that current options have various flaws. Currently, U.S. investors can only purchase bitcoin futures ETFs that hold contracts for buying or selling the asset at a predetermined price in the future. A spot bitcoin ETF would directly invest in the digital asset.
Armour expects a “batch approval” from the SEC if they decide to approve a spot bitcoin ETF. He believes that multiple ETF listings could be approved on the same day since most issuers are taking similar approaches with their applications. Armour expresses greater optimism about a bitcoin ETF than ever before due to positive signs from recent filings.
Potential Impact on Bitcoin Price
Some crypto investors anticipate a bitcoin rally once the spot bitcoin ETF is approved. However, there is also a possibility that the price will dip as investors sell to collect profits, according to Armour.
Still an ‘Extremely Volatile’ Asset
While the approval of a spot bitcoin ETF may make cryptocurrency more accessible to the masses, experts advise investors to consider their risk tolerance and goals before investing. Ben Smith, a certified financial planner, suggests that a spot bitcoin ETF could be suitable for aggressive investors with a higher risk appetite. However, due to its extreme volatility and speculative nature, experts recommend limiting cryptocurrency exposure to 1% to 5% of an investor’s portfolio.
A survey conducted by Nasdaq in 2022 revealed that 72% of financial advisors would be more inclined to invest in crypto if spot ETFs were approved in the U.S.
Hot Take: The Future of Bitcoin Investments
The potential approval of a spot bitcoin ETF by the SEC has generated anticipation among cryptocurrency investors. If approved, this ETF would provide a direct investment opportunity in the digital asset and be considered the best option for ETF investors. However, it is important for investors to carefully evaluate their risk tolerance and goals before diving into bitcoin investments. While the approval may make cryptocurrency more accessible, it remains an extremely volatile and speculative asset. With the majority of financial advisors expressing interest in spot ETFs, it will be interesting to see how this development shapes the future of bitcoin investments.
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