The SEC today approved the launch of the first ever spot bitcoin-ETF.
This was reported by Eric Balchunas, Michael van de Poppe and other sources, citing an official SEC document.
A spot bitcoin ETF is of utmost importance to the cryptocurrency market. It serves as a crucial institutional and legal investment tool for major players.
Unlike other funds that trade contracts tied to the exchange rate of an asset, a spot ETF requires the issuer to directly purchase the underlying asset, in this case bitcoin itself.
To understand the importance of a bitcoin spot ETF, let's draw a parallel to the launch of the first U.S. spot gold ETF, the SPDR Gold Trust (GLD), in 2004. This ETF invested in physical gold and tracked its price. As a result, the price of gold rose 330% over the next seven years.
Similarly, a bitcoin spot ETF would have a profound impact on the cryptocurrency market. It would create a direct link between the ETF issuer and the bitcoin market, resulting in increased demand for this digital asset. This increased demand could potentially lead to an increase in the price of bitcoin, which would favor investors and the market as a whole.
However, the road to the launch of the spot bitcoin-ETF has been marred by reports of manipulation. These reports caused significant volatility in the market and resulted in losses for regular traders. For example, the false news that the U.S. Securities and Exchange #Commission had approved the application of iShares, a division of #BlackRock, led to a temporary spike in the bitcoin price, followed by a correction when the rejection became known.
In another instance, cryptocurrency company Matrixport published a report claiming that the SEC would reject applications for a bitcoin ETF. This caused panic selling and led to the liquidation of more than half a billion dollars worth of shares. However, it was later revealed that Matrixport's statements were based on speculation rather than concrete information.
The approval and launch of a spot #ETF for bitcoin in the US will be a watershed moment for the cryptocurrency market. It will provide institutional investors with a direct and regulated investment tool and potentially boost the price of #bitcoin.
