SEC Approves 11 Spot-Based Bitcoin ETFs for Major Asset Managers

SEC approves spot Bitcoin ETFs for 11 issuers

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Last updated: January 11, 2024

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SEC approves spot Bitcoin ETFs for 11 issuers

The U.S. Securities and Exchange Commission (SEC) approved 11 spot-based Bitcoin ETF applications on Wednesday, allowing major assets managers BlackRock, Grayscale, Fidelity and Invesco, among others, to offer the asset class to investors.

Despite the approval, the SEC remains skeptical toward crypto assets, saying the agency still does not endorse Bitcoin. Chairman Gary Gensler said investors should be cautious about the risks related to Bitcoin and other cryptocurrency products.

While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse Bitcoin

Gary Gensler, SEC chairman.

All 11 approved ETFs will start trading on Thursday. The approval has started a new era of Bitcoin investment, allowing the public to invest in the cryptocurrency without having to actually own it.

“It’s a huge positive for the institutionalization of Bitcoin as an asset class,” said managing director and senior Fintech analyst at Rosenblatt Securities Andrew Bond.

Following the approval, Bitcoin’s price rose three percent to $47,300. The cryptocurrency has gained over 70 percent in recent months amid the anticipation of the ETFs, reaching its highest level since March 2022 this week.

Standard Chartered analysts said the ETFs could draw $50 billion to $100 billion this year alone, while other analysts said the inflows would be around $55 billion over five years.

However, some analysts said the inflows mostly depend on fees and liquidity. Some issuers cut their proposed fees in new fillings this week, ranging from 0.2 to 1.5 percent. These include BlackRock and Ark/21Shares. Many issuers also offered to fully exempt fees for a certain period.

Standard Chartered Bank financial research head Geoffrey Kendrick said the much-awaited approval from the SEC, which was finally decided on January 10, was a watershed moment for normalizing Bitcoin participation by institutional money. He predicted Bitcoin could reach $200,000 by the end of 2025, with between $50 billion and $100 billion invested in Bitcoin ETF by the end of this year.

We see this as a watershed moment for normalizing bitcoin participation by institutional money, and we expect approval to drive significant inflows and price upside for BTC

Geoffrey Kendrick, crypto research head at Standard Chartered Bank.

Moreover, crypto advocates said the spot Bitcoin ETF approval would be good for Bitcoin and the overall crypto sector in the long term.

Coinbase institutional research head David Duong said Bitcoin ETF would open an opportunity for the wealth management community and could be a foundation for financial products in the future. Duong said Bitcoin ETF could add billions of dollars to the total market cap in the long term.

Likewise, Cinneamhain Ventures managing partner Adam Cochran said the biggest impact of Bitcoin ETF was its validity for pension funds, Individual Retirement Accounts (IRAs), mutual funds and other conservative funds.

Impact on Ethereum and mining stocks

Following the mass approval of the spot Bitcoin ETFs, Ether’s value increased. This development also supported other cryptocurrencies in the Ethereum ecosystem. Polygon gained 13 percent, Chainlink rose to 11 percent and Uniswap advanced 14 percent.

Ethereum penetrated the $2,500 mark for the first time since May 2022 on Wednesday afternoon, and currently trading around $2,550, up 11 percent over the past day, as reported by Decrypt.

Athena Labs research head Conor Ryder said traders were shifting to anticipate an Ethereum ETF after the development. Bloomberg ETF analyst Eric Balchunas said that an ETH ETF would be approved by May, with an odd of 70 percent.

Meanwhile, the increase in Bitcoin price affected mining stocks in after-trading hours. Wall Street’s iris Energy and CleanSpark gained six and seven percent, respectively. Meanwhile, Marathon Digital added six percent and Riot Platforms gained five percent.

Author

Kamal Masri

Kamal is an experienced financial analyst with a demonstrated history of working in the Financial Market. Skilled in Equities, Capital Markets, Portfolio Management, Risk management, and Corporate Finance. Kamal has worked at some of the leading online finance publications providing his expert knowledge on cryptocurrency. Kamal has written widely on digital assets across the stock and crypto media space and beyond, including for Coindesk, Ethereum World News and The FinTech Times.

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