BTC ETFs Are Coming: Read to Know More

Anyone can trade bitcoin (BTC); that’s the fundamental principle of an open protocol like Bitcoin. However, significant attention and effort are being directed toward alternative methods of accessing bitcoins. Specifically, why is there such heightened anticipation surrounding spot market bitcoin ETFs, or exchange-traded funds, especially when similar products like “futures-based” ETFs and exchange-traded products (ETPs) are already available?

Nonetheless, today, even on the mere rumor that asset manager BlackRock’s bitcoin ETF had received final approval (which it hadn’t), the markets experienced a $2,000 surge (followed by a subsequent decline). Evidently, there is pent-up demand for these conventional financial instruments or at least a significant amount of capital waiting on the sidelines, ready to engage in trading activities related to ETF news.

For instance, initial reports wrongly indicated that BlackRock’s iShares Bitcoin ETP application had been approved. However, BlackRock clarified that its application is still under review by the U.S. Securities and Exchange Commission (SEC). The heightened interest in ETF-related news is partly due to the recent announcement that a competitor ETF application from Grayscale is back in play, following the SEC’s failure to respond to an appeals court ruling.

In the case of BlackRock’s ETF application, much of the excitement is attributed to the fact that it is the world’s largest asset manager behind the filing and has expressed interest in further involvement in crypto markets. BlackRock’s application itself serves as validation for the entire crypto industry. Comments made by BlackRock CEO Larry Fink, who argued that a non-national government-affiliated monetary asset would become increasingly attractive, added to the positive sentiment.

The desire for a spot market bitcoin ETF arises from the fact that many individuals, firms, and funds interested in gaining exposure to bitcoin are currently unable to do so. A traditional financial vehicle for this novel asset class would serve as a bridge to attract sidelined capital. Some estimates suggest that billions of dollars could flow into a spot market bitcoin ETF, at least in theory.

However, the intense interest in bitcoin ETFs may also be due to the fact that the investing public has been denied access thus far. The SEC has consistently rejected all spot-based BTC ETF applications it has encountered, starting with the Winklevoss twins’ failed attempt in 2013. The SEC’s argument typically revolves around concerns about market manipulation, partly due to bitcoin’s relative illiquidity and the lack of satisfactory market “surveillance” systems.