Bitcoin ETF: All You Need To Know!

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By A D

The crypto community is eagerly awaiting the first spot Bitcoin ETF approval, as it could mark a significant milestone for the market. The SEC has a limited window that began on November 9th, lasting until November 17th, during which it could potentially approve these ETF applications. The SEC extended the deadline for spot Bitcoin ETF filings due to the November 8th comment period.

Read: BlackRock Files Application for Bitcoin ETF

The Securities and Exchange Commission (SEC) might approve up to nine of the twelve applications, including BlackRock, Grayscale, 21Shares, Bitwise, VanEck, Wisdomtree, Invesco, and Galaxy. There is still time for the SEC to decide on nine of the twelve applications before Jan. 10, despite the deadline for accepting all 12 filings ending on Nov. 17.

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After Bitcoin ETF, BlackRock Applies For Ethereum ETF

While Bitcoin ETF has been the an the centre of discussions, altcoin ETFs have been much awaited amongst investors too. And so, the developing news of an Ethereum ETF has the crypto world buzzing. On Oct. 9, Delaware’s Division of Corporations registered an iShares Ethereum Trust.

It’s worth noting that one week before BlackRock filed for its Bitcoin ETF in June, the iShares Bitcoin Trust published a similar notice. VanEck, ARK 21Shares, Invesco, Grayscale, and Hashdex are all rumored to be competing for a spot Ethereum ETF approval from the Securities and Exchange Commission.

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Bitcoin ETF Approval Buzz: BTC and ETH Prices Shoot Up!

Anticipation and hype have always been major influences on the crypto market. The prospect of a spot Bitcoin ETF approval has had Bitcoin surging past $35,000. A rise of nearly 5% in the last week helped Bitcoin price hit $37,900 for the first time in 18 months.

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Even as whale transactions valued at $100,000 or more increased, the uptrend was able to resist sell pressure.Bitcoin now faces resistance at $38,000. Its price could erase all impacts from 2022 if it rises over $40,000.

Thanks to BlackRock’s ETH ETF news, Ethereum experienced a 10% surge, reaching levels near $2,100. ETH is now trading at $2,106. Carrying the SEC’s approval for ETH Futures from earlier this year, the altcoin is now at its six-month high.

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In the midst of the crypto ETF hype, the altcoin market presents a dynamic picture. XRP has experienced a 5.21% decline, adopting a bearish stance with its current value resting at $0.6511. In contrast, SOL is on an upward trajectory, registering a 4.80% gain. It has maintained a bullish trend, finding support above the $42 mark.

What Are Crypto ETFs?

An investment fund designed to track the performance of one or more cryptocurrencies or crypto-related assets is called a crypto ETF, or cryptocurrency exchange-traded fund. These ETFs allow investors to gain exposure to the crypto market without the need to personally hold or manage cryptocurrencies themselves.

There are two main types of crypto ETFs: spot crypto ETFs and futures crypto ETFs.

Spot ETFs are backed by “physical” cryptocurrencies. When investors purchase shares of a spot crypto ETF, the issuer of the ETF must buy and custody the corresponding amount of cryptocurrencies. The share price of a spot crypto ETF reflects the price of the underlying cryptocurrencies it holds.

Futures crypto ETFs track the price movement of crypto futures by buying futures contracts instead of holding the actual cryptocurrencies. Futures contracts are financial derivatives that allow investors to buy or sell the underlying asset at a predetermined price in the future. Prices of futures contracts may differ from the spot prices of cryptocurrencies due to market sentiment. Much discussion and speculation in the crypto community have been generated by a Bitcoin ETF, with some enthusiasts believing it could be the catalyst for a new bull run.

Crypto ETF Evolution: A Timeline So Far

The evolution of the cryptocurrency exchange-traded fund (ETF) industry has been nothing short of remarkable. From its modest beginnings to the present, crypto ETFs have come a long way, offering investors various ways to gain exposure to the digital asset market.

2014: The Birth of ARK Web x.0 ETF (ARKW)

The story begins in September 2014 with the ARK Web x.0 ETF, now known as ARKW. In its early days, this ETF held positions in traditional tech giants like LinkedIn, Netflix, and Amazon. At that time, Bitcoin and blockchain technology were just starting to gain recognition, and the ETF landscape was vastly different.

2018: The Emergence of Blockchain ETFs

Blockchain ETFs made their debut in 2018, with the Amplify Transformational Data Sharing ETF (BLOK) and the Siren Nasdaq NexGen Economy ETF (BLCN) leading the way. These were the first ETFs with a specific focus on blockchain technology, paving the path for investors to gain exposure to this emerging sector.

2021: Bitcoin’s Price Surge and New Products

The year 2021 marked a significant turning point in the crypto ETF industry. The rising price of Bitcoin and increased investor interest drove this change. The VanEck Digital Transformation ETF (DAPP) initiated a new wave of launches in April. In May 2021, the Bitwise Crypto Industry Innovators ETF (BITQ) made history as the first ETF with “crypto” in its name.

As Bitcoin approached new all-time highs, more crypto equity ETFs entered the scene, allowing investors to participate in the crypto space without directly holding cryptocurrencies. Notably, in October 2021, the ProShares Bitcoin Strategy ETF (BITO) became the first futures-based ETF, followed by others like the Valkyrie Bitcoin Strategy ETF (BTF) and the VanEck Strategy ETF (XBTF).

2022: The First Inverse Futures Bitcoin ETF

In June 2022, the crypto ETF landscape expanded with the launch of the ProShares Short Bitcoin Strategy ETF (BITI), the first and only inverse futures-based Bitcoin ETF. This unique option allowed investors to profit from Bitcoin’s price drops via diverse ETF choices.

2023: Closures and a Challenging Quarter

Early 2023 brought trials for the crypto sector as FTX crumbled, and Bitcoin dropped below $20,000. Several ETFs have closed, such as the Viridi Bitcoin Miners ETF (RIGZ), the Volt Crypto Industry Revolution and Tech ETF (BTCR), and the VanEck Digital Assets Mining ETF (DAM). Currently, WGMI stands as the only Bitcoin mining ETF in the U.S.

Read: HSBC Empowers Hong Kong’s Crypto Evolution: Enabling Bitcoin ETFs

Despite these closures, approximately 25 crypto ETFs continue to serve diverse purposes. They offer investors different options in the ever-evolving crypto landscape.

Spot vs Futures ETFs

A significant narrative in the crypto ETF space is the distinction between spot and futures-based ETFs. Over a decade ago, the Winklevoss twins attempted to launch their own spot Bitcoin ETF. It was known as the Winklevoss Bitcoin Trust. However, they faced challenges and ultimately failed to gain SEC approval.

The SEC has consistently rejected spot Bitcoin ETF applications, citing concerns over investor protection and market uncertainty. Notable applicants include Grayscale, Ark 21Shares, WisdomTree, GlobalX, Fidelity, First Trust, and VanEck, among others.

In the absence of spot Bitcoin ETFs, American investors seeking regulated exposure to Bitcoin have had to turn to futures-based ETFs.

Futures-based ETFs often have lower returns and higher fees due to futures contracts, but the SEC is more likely to approve them. This is because they consider futures-based ETFs to be more within their regulatory jurisdiction.

The SEC’s preference for approving futures-based Bitcoin ETFs is driven by the fact that Bitcoin futures are already overseen by the Commodity Futures Trading Commission (CFTC). This regulatory oversight provides a level of comfort and familiarity, making it easier for the SEC to grant approval.

When ProShares launched the Bitcoin Strategy ETF (BITO) in October 2021, it quickly became one of the most heavily traded ETFs in history on its launch date. Currently, it boasts the highest Assets Under Management (AUM) among Bitcoin and digital asset ETFs.

Why is the approval of a Bitcoin ETF such a big deal?

A Bitcoin ETF has generated much discussion and speculation in the crypto community, with some enthusiasts believing it could be the catalyst for a new bull run.

An approval can potentially reshape the traditional Wall Street banking system. If approved, it would enable large investors, banks, and money managers to swiftly enter the Bitcoin market.

There’s already a substantial amount of Bitcoin held in existing ETFs and similar investment products, totaling approximately $21.7 billion. It is being predicted that there could be $14 billion of inflows in the first year, followed by increasing amounts in subsequent years.

Blackrock Is Funding A Genocide?

The Larry Fink led company has been very transparent about their partnerships and investments. However, their link to Israel is getting highlighted now that the forceful occupants are raging war on Palestine.

In 1948, Israel’s atrocity in Palestine included illegal and forceful occupation of parts of Palestine, leading to the displacement of Palestinians from their homes and their forced relinquishment of land. This event, known as the Nakba, marks the beginning of Israel’s war against Palestine. Since then, Israel has continuously tortured and bombed Palestine, in a bid to ethnically cleanse and colonise Palestine.

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Even though, this has been going on for just about 75 years, social media connectivity is what’s putting a spotlight on the alarmingly rising cruelty now. Since Gaza’s retaliation on Oct. 7, Israel has been repeatedly and cold-bloodedly killing Palestinians on their own land- dropping the internationally banned white phosphorus, killing civillians and journalists, bombing hospitals and schools, and deliberately holding essentials from palestinians.

During the ongoing brutality, several pro-Palestine groups have called for boycott of institutios than are funding Israel. This is where Blackrock’s investments in Israel have been highlighted. Operating there since 2016, BlackRock invests over $33 billion in Israel.

In an environment where Israel’s ugly truth is coming out and, more and more people are willing to join the movement of protesting and boycotting, the question arises- will this affect the profit projections that are expected from bitcoin ETFs? Will this eventually catch up to bitcoin and turn people against it?

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