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Bitcoin ETF’s past applications have all been declined. For about 8 years now, SEC has persistently declined to give such approvals. The regulator remains skeptical about such a product. However, the mood seems to be changing as current pronouncements regarding the product are more positive. This is giving some signals that approval could be possible soon.
This optimism is one of the drivers fueling the price of Bitcoin recently. The price of Bitcoin has broken the sentimental $55 K and is now averaging the 56k price. It is a major move that investors believe could end up with the price hitting $100K.
What are ETFs?
ETF is an Exchange Trade Fund. This is a fund whose trading is done on the stock exchanges. ETFs are publicly traded allowing investors to perform similar transactions to those of other assets such as stocks. One benefit of an ETF is that they are cheaper to trade as they attract lower commissions.
Approval of a Bitcoin ETF would be historical because it is the first of this kind to happen.
When Will the Approval Happen?
The exact time when approval is likely to happen is not clear. Some think it will happen this year while others are betting on 2022.
Most of the decisions that had been scheduled have been postponed to December and November by the Securities Exchange Commission (SEC).
The regulators are still hesitant to give such approval mainly because of the risks involved with cryptocurrencies. It seems SEC are finding it easier to approve Cryptocurrency ETF futures because they don’t have direct exposure to cryptocurrencies.
Some of the leading applicants include Proshares, Valkyrie investments, Invesco, and galaxy digital. It is likely the first approval will go to one of the companies on the above list.
What ETF approval Means for Bitcoin.
The chance of getting approval is already causing excitement. Any such approval will be a key validation of bitcoin as a major financial asset and could indicate the beginning of the government supporting cryptocurrency.
This is likely to cause huge price movement on bitcoin and possibly making it get to the sentimental $100,000 value. Bitcoin has made major price movements before making this jump possible.
It is key to remember that bitcoin has a lower supply cap making it easier for the price to grow when demand increases.
An approval of Bitcoin ETF will make it possible for investors to access the crypto market through the ETF. Due to the huge growth of the crypto industry, this increases their probability of making higher returns. Hence, there could be a huge money flow towards the ETFs. When you combine this with the already existing benefits of ETF, it will be key in growing the industry.
Global Market Response
Most countries are waiting to see how such approval will work and its effect on the market. If successful, it will set the way for other countries to follow the same route in their markets as well.
This global chain reaction could be the beginning of bringing cryptocurrencies to the mainstream financial markets.