Bitcoin, as of Thursday morning, was up more than 5% over the past 24 hours, to about $47,600, after the Securities and Exchange Commission said in a filing on Wednesday that it had approved 11 applications to create the first generation of spot Bitcoin ETFs in the U.S.The second-most-popular cryptocurrency, Ether, was up double digits, with a 10% rally pushing it above $2,600.
Wednesday’s approval comes after hackers took over the regulator’s X/Twitter account on Tuesday and sent a fake post announcing the approval of the pending spot Bitcoin applications. The fake-out spurred a flurry of excited tweets before SEC Chairman Gary Gensler alerted potential investors to the hack, a correction that led to myriad memes and ridicule of the agency online.
Similar fears spread briefly on Wednesday after the SEC’s filing announcing the approval of 11 spot Bitcoin ETF applications disappeared from the agency’s website before reappearing. This time, Gensler confirmed the approval with a statement that said approving spot Bitcoin ETFs was the “most sustainable path forward,” but did not guarantee financial products dealing with other cryptocurrencies would be approved. In a 3-to-2 vote, Gensler, a Democrat, sided with two Republican SEC commissioners in favor of approving the Bitcoin ETFs.
A new chapter
Hope ran high among some analysts and market onlookers who said they believe spot Bitcoin ETFs will usher in a new era for Bitcoin.
Mark Connors, head of research at investment fund manager 3iQ, said although it may take months for some investment advisors to start bringing client money to Bitcoin, other pools of money could quickly create $2.5 billion to $3 billion of inflows after the ETFs start trading on Thursday. More investment will follow over the next months and years, he said, because TradFi firms now have an interest in seeing Bitcoin succeed.
“You have the whole system now incentivized to drive investment and volume in this product,” he told Fortune.
Thursday’s Bitcoin rally wasn’t much of a surprise, said Ben Cole, a professor of statistics and strategy at Fordham University’s Gabelli School of Business, because Bitcoin has in the past jumped on big news events, such as previous “halvenings.” The ease of incorporating a spot Bitcoin ETF in retirement accounts and other established portfolios also bodes well for Bitcoin’s performance in the coming months and years, he added.
“If you can have someone else handle that, but you can still get the exposure to the price fluctuations, that’s going to be very appealing to a lot of people,” Cole told Fortune.
Others on Crypto Twitter rejoiced at the news in hopes that the cryptocurrency would finally become a mainstream investment option and go on a tear.
First Bitcoin spot ETF will start trading
on NYSE in next 2 hours. This is truly
a historic day for crypto. I hope all
these institutions send BTC higher.
— Ash Crypto (@Ashcryptoreal) January 11, 2024
BREAKING:
SEC approves ALL #Bitcoin Spot ETFs from all participants.
The bull market has started!
ETF performance?
The real test for the Bitcoin ETFs comes when trading begins. Already, BlackRock’s ETF, the iShares Bitcoin Trust, had garnered $2 million of shares traded early Thursday, although those shares may have been sold before the ETF was approved, according to an X post by Bloomberg senior ETF analyst Eric Balchunas.
Still, market onlookers, including British bank Standard Chartered, predicted that the new spot Bitcoin ETFs could help funnel $1 billion to Bitcoin over the next three months—and $100 billion by the end of the year.
Already, the dozen or so companies vying for a spot Bitcoin ETF have begun to compete on fees, with several of the issuers dropping theirs to between 0.24% and 3% to attract customers. The average fee for a U.S. ETF is about 0.54%, according to Reuters. For comparison, the $27 billion Grayscale Bitcoin Trust, which also lets investors put money into Bitcoin, has a fee of 2%, although it plans to cut it to 1.5% for its spot Bitcoin ETF.
Prominent finance figures have already started rallying support for spot Bitcoin ETFs, including Cathie Wood, CEO of ARK Invest, who said in an interview with Bloomberg TV on Wednesday that although her firm’s ETF may not see “overnight success,” she expects institutional dollars to come around after TradFi firms work through the due diligence process.
Wood said the firm’s ETF will look to attract both institutional and retail investors.
“The interest is far and wide,” she said.
Learn more about all things crypto with short, easy-to-read lesson cards. Click here for Fortune's Crypto Crash Course.
FAQs
The Securities and Exchange Commission (SEC) rejected spot bitcoin ETFs for more than a decade, hoping to protect investors from market manipulation. But the SEC was forced to approve them last month after Grayscale Investments won a court challenge.
How many spot bitcoin ETFs were approved? ›
In total, the SEC approved 11 spot Bitcoin ETFs, and 10 of them started trading on Thursday, Jan. 11.
How has the approval of spot bitcoin ETFs impacted the financial ecosystem? ›
The approval of the spot bitcoin ETFs constituted a landmark event for the $1.7 trillion digital asset industry. With institutional investors on board, demand for bitcoin will grow significantly. We've passed the one-month mark since the spot bitcoin ETF approvals in the US, and now we have real-world data to review.
Will bitcoin go up when ETF approved? ›
Several crypto investors CNBC spoke with said they see the world's top cryptocurrency rising in 2024, as the effects of approval of a bitcoin ETF, which would diversify the range of investors that can gain exposure to the cryptocurrency, begin to become more apparent.
What is the bitcoin ETF approval? ›
Instead it is used for illicit transactions. The latest approval of an ETF doesn't change the fact that Bitcoin is not suitable as means of payment or as an investment. This feature requires cookies. On 10 January, the US Securities and Exchange Commission (SEC) approved spot exchange-traded funds (ETFs) for Bitcoin.
Why was bitcoin ETF not approved? ›
The SEC has previously rejected all spot bitcoin ETF proposals over fears of market manipulation. Accounts on X, like accounts on other social media platforms, are sometimes hijacked by stealing passwords or tricking targets into giving up their login credentials.
Will a spot ETF be approved? ›
The U.S. Securities and Exchange Commission approved the first 11 bitcoin spot ETFs in the United States on Jan. 10, 2024. Bitcoin futures ETFs had already been trading since 2021.
What are the 11 approved ETFs for Bitcoin? ›
The approved ETFs are products from major financial players such as Grayscale Bitcoin Trust GBTC, BlackRock's iShares Bitcoin Trust (IBIT), ARK 21Shares Bitcoin ETF (ARKB),Bitwise Bitcoin ETF (BITB),Invesco Galaxy Bitcoin ETF (BTCO),WisdomTree Bitcoin Fund (BTCW),VanEck Bitcoin Trust (HODL),Franklin Bitcoin ETF (EZBC), ...
How much Bitcoin do ETFs own? ›
U.S. spot bitcoin ETFs now hold roughly 4% of the entire 21 million BTC supply combined. The nine newborn ETFs are on pace to hold more bitcoins than Grayscale's converted GBTC fund by the end of today.
What will spot ETF do to Bitcoin price? ›
Spot ETFs, such as the new spot bitcoin ETFs, allow for shares of the fund to be created or redeemed based on market demand. In this way, a spot bitcoin ETF allows investors to gain exposure to the current price of bitcoin without having to hold the asset itself.
Government intervention
When people think about what can go wrong with Bitcoin, I think the biggest risk factor that comes to mind is governments simply banning it. This means they would make it illegal to own it or transact with it, and mining the cryptocurrency would also be a criminal act.
How will ETFs affect Bitcoin? ›
While the new spot bitcoin ETFs are designed to track the bitcoin price directly, they do not impact it in the same way. Buying a share of an ETF has no real-time impact on bitcoin's price through direct means. In fact, the bitcoin represented by the share is not even purchased until the next trading day.
Is ETF good or bad for Bitcoin? ›
Though crypto ETFs offer benefits, there are drawbacks to consider: Fees: Investing in a crypto ETF is likely to be more expensive than buying cryptocurrency directly. When buying crypto, you only need to make a one-time payment to the exchange, which can be as low as a few hundredths of the value traded.
Is it better to own Bitcoin or ETF? ›
There are several benefits to owning the actual Bitcoin by purchasing through a cryptocurrency exchange. In some situations, the ETFs offer investors all they need. The decision between the two will come down to personal preference and technological savvy.
What is the prediction of Bitcoin after ETF approval? ›
Cathie Wood Sees Bitcoin Price Reaching $1.5M by 2030 After ETF Approval.
Is the bitcoin ETF legal? ›
The U.S. Securities and Exchange Commission (SEC), the agency responsible for regulating the securities markets and protecting investors in the U.S.A, granted approval to 11 spot Bitcoin exchange-traded funds (ETF), in its Approval Order on 10 January 2024.
Are bitcoin ETFs coming to the US stock exchanges? ›
Investors and financial advisors will be watching closely to see not only how the bitcoin ETFs perform, but also how well they track the price of bitcoin and the trading volume of the funds.
Does USA have bitcoin ETF? ›
In early January 2024, the U.S. Securities and Exchange Commission (U.S. SEC) gave its approval on exchange-traded funds (ETFs) to track Bitcoin, giving investors an alternative pathway to accessing the world's biggest cryptocurrency.
Is bitcoin ETF available? ›
Spot bitcoin ETFs are available on a variety of traditional platforms that offer popular services, like stock and options trading, retirement planning, advisory services, and automated investing.
