Bitcoin rises after SEC approves cryptocurrency-based ETF. The news, while already anticipated and feared by operators in the sector, exploded last week and caused values to explode, but the implications are not just speculative. The decision by the US Consobu actually marked the history of finance by approving a financial instrument that allows all intents and purposes to invest in Bitcoin and that opens the door to other similar instruments based on other cryptocurrencies. Let’s then try to explain the SEC decision and what Bitcoin ETFs are.
What are ETFs?
SEC approved eleven banking institutions to list Bitcoin ETFs. To understand what this means and the historical significance of this decision, we need to start from the basics, first explaining what ETFs are. ETF, short for Exchange traded funds, is, as the name suggests, an index fund listed on the stock exchange. In other words, it is an investment vehicle that can be bought and sold on international exchanges like a regular security, the performance of which reflects the performance of an index or other investment vehicle. There is an advantage to buying an ETF they allow you to “indirectly” purchase tools that would be difficult to “directly” manage.while enjoying their relative performance. Another undoubted advantage of ETFs is that they have no management costs, as they can be purchased in shares on the stock exchange. Which makes them recommended tools for portfolio diversification, even for do-it-yourselfers.
For example, who wants to invest in gold he doesn’t necessarily buy a lot of nuggets or bars, but he can buy gold ETFs on the exchange: he earns directly proportional to the performance of the commodity. The same applies to oil or other raw materials, but also to entire stock indices. Whoever buys an ETF on the S&P 500, for example, will not be forced to buy all the securities that make up the US stock market, but will be able to benefit from the performance of the entire index with a single instrument.
Bitcoin ETFs: What They Are and Why They’re Revolutionary
Regarding the above mentioned,Bitcoin ETFs it is a listed fund whose performance depends precisely on the performance of Bitcoin. The fact that the SEC, which is the US Consob, has approved the listing of Bitcoin ETFs on an exchange is of historic importance to at least three reasons.
- First, like this the cryptocurrency is listed on a regulated stock market; which is revolutionary because cryptocurrencies are by definition not dependent on an “official” market, but on a parallel exchange system that has a completely different dynamic.
- The other one that affords itself exactly as ETFs afford it indirectly invest in cryptocurrencies even those who never wanted to do it directly, hindered precisely by the price dynamics of these instruments, which still make them the subject of many doubts. The fact that we have an instrument that indirectly provides access to Bitcoin and also provides the guarantees of a regulated market can instead encourage investment in this sense and in fact has provided that support, if it is true that today the value of Bitcoin has skyrocketed.
- A third reason for the historical significance of the SEC decision concerns financial operators who will now work at full speed create an ETF on bitcoins to be listed. Not only that: but if the SEC decision were to extend to other cryptocurrencies such as Ethereum (as expected), the world of financial instruments based on virtual currencies could experience new horizons of development.
For industry insiders, the SEC’s historic ruling marks the entry of Bitcoin and cryptocurrencies into the world of institutional investment and will only change it for the better.
“The SEC’s approval of all eleven regulatory filings for physical bitcoin spot price ETFs (including BlackRock, Fidelity Investments and Franklin Templeton) is undoubtedly a historic milestone for the digital asset sector.” Luciano Serra, Country Manager Italy Boerse Stuttgart Digital. – In addition to the legislative impact, this decision by the US regulator will strengthen and confirm the legitimacy of digital assets and significantly expand the possible investment of institutional investors in the sector. The approval also marks a new and decisive step towards the maturity stage of Bitcoin and cryptocurrencies and will also help reduce their volatility. In essence, the legitimacy of digital assets will be strengthened and confirmed as it simplifies their purchase and tax management, thereby indirectly bringing Bitcoin into the portfolios of many traditional investors, both institutional and retail. This is an important turning point towards the convergence of traditional and digital finance, which we strongly believe in as Stuttgart Stock Exchange. Strengthened by more than 160 years of history, as a regulated partner for banks, brokers and asset managers, since 2019 – the first among exchanges in Europe – we have been working towards this convergence through a complete offering of cryptocurrencies and digital assets for institutional customers, covering the entire value chain of digital finance”.
“The SEC’s approval of BTCW offers investors access to Bitcoin through an ETF, one of the most impressive financial innovations of our time,” he said. Jeremy Schwartz, Global Chief Investment Officer, WisdomTree. – For investors oriented in this sense, but trying to come into contact with this digital asset only through regulated and traditional channels, this is a long-awaited opportunity in the United States that is finally coming to fruition. There is no denying that the financial sector is undergoing a major transformation; how quickly we get there depends on key moments like today. WisdomTree is proud to be a part of this historic moment.”
Bitcoin ETF: what happens now
But what will happen to the global stock markets now that Botcoin has conquered them? “On the prices bitcoin in the short term I don’t think the decision will have much impact Secbecause different operators ETFs they have already made large purchases of the base, especially since November, – he answers Eugenio Sartorelli, strategist Investimentivincenti.it and Siat board member, mentioned on the website Bluerating.com. – This news was actually widely anticipated by those directly involved and many analysts in the crypto sector. And finally, I believe that in the short-term, the price of Bitcoin can move in a trading range. however C“has a big impact on Ethereum as ETFs are expected to be approved for this cryptocurrency within a few months as well. When we think about longer times (months), the impact of this event will largely depend on the demand for various BTC ETFs; let’s say that a positive effect is very likely in any case. I don’t think this is the time to sell news; That doesn’t mean Bitcoin couldn’t correct significantly, but it would do so for different reasons.”