Bitcoin price reached a 17-month peak this week as the largest asset management firm in the world is making the final arrangements for its first spot bitcoin ETF to enter the market.
Spot bitcoin ETFs give investors exposure to the crypto market without the risk of owning crypto. The unique appeal of this type of investment leads analysts to predict that when approved they will generate $14.4 trillion in the first year after launch, causing the price of Bitcoin to increase up to 74%.
Blackrock, Grayscale, Fidelity, Invesco, and millions of crypto and traditional investors have been yearning for the U.S. Securities and Exchange Commission (SEC) to approve a spot bitcoin ETF for years, but it is only with fairly recent developments that their wishes are likely to become reality.
A Cinderella Love Story
Cryptocurrencies were once considered too risky an asset, relegated to the dark corners of the internet. However, as the market around them matured to offer safer investment choices, so did their appeal to institutional and traditional investors.
The trouble and strife within the crypto market last year made the SEC redouble its efforts in 'protecting' investors from the risks of decentralized assets. But in attempting to take out what was rotten, the agency has been stopping what is good from growing, defeating its own stated purpose of facilitating capital formation.
In the U.S., the final say will always belong to the invisible hand of the market. On Monday, a federal court formalized a ruling overturning the SEC’s rejection of crypto asset management firm Grayscale's spot bitcoin ETF application. The filing was originally denied because investment vehicles such as this allegedly lack sufficient investor protection mechanisms.
Time For A Celebration
With more than 3,200 ETFs in existence, the 7 trillion dollar United States market for Exchange Trade Funds (ETFs ) is a saturated one, with players constantly looking for the next big thing.
Of all the players in this market, Blackrock is the biggest.
And of all the pending applications for spot Bitcoin ETFs, Blackrock’s is the one that appears closest to launch. Experts believe the iShares Bitcoin Trust (IBT) will be first to gain approval from the market regulator. It has already been listed on the Depository Trust and Clearing Corporation (DTCC), a private entity processing trillions of dollars in securities daily.
The listing in the DTCC is just a bureaucratic step, but it sends the signal that IBT is one step closer to achieving the SEC’s approval than the following pack.
In their recent spot bitcoin ETF amendment, Blackrock announced it would be funding the IBT in October. As soon as the news broke, there was a revival in the price of bitcoin and bitcoin-related products.
While waiting on the SEC's final say, both crypto and traditional marketplaces enjoy an inflow of capital and entertain hopes of what a future together will be like.