KUALA LUMPUR, MALAYSIA – In a groundbreaking move, the U.S. Securities and Exchange Commission (SEC) granted approval for the launch of 11 bitcoin exchange-traded funds (BTC ETFs). This regulatory nod is poised to play a pivotal role in simplifying the process for ordinary investors to engage with digital currencies, ultimately fostering the continued expansion of the market. Notably, the SEC had previously withheld approval for such ETFs for a decade.
The SEC’s decision is hailed as a crucial milestone for the cryptocurrency industry, particularly for spot bitcoin ETFs, as it provides investors with direct access to bitcoins without ownership, by purchasing shares in these funds which, in turn, directly acquire bitcoins.
Despite being a valuable tool for investors, Octa analyst Kar Yong Ang cautions that spot bitcoin ETFs may not be as suitable for traders. Ang explains, “Investing in spot bitcoin ETFs is different from buying bitcoins directly for several reasons. Firstly, investors who invest in bitcoin ETFs do not own bitcoins directly. Secondly, financial companies will charge a commission for trading and managing bitcoin ETFs.” He contrasts this with the direct purchase of bitcoins through brokers, where investors only incur a transaction fee without investment management costs.
Investors are anticipating that spot bitcoin ETFs will attract billions of dollars into the digital currency, making investment more accessible and less intimidating. This surge in demand is expected to drive up the price of bitcoin, further stimulating interest and investment in the cryptocurrency. The increased influx of funds into bitcoins, coupled with the introduction of new financial products from reputable players, may also expedite the implementation of sensible regulations aimed at eliminating fraud and standardizing cryptocurrency use for investments, payments, and broader business transactions.
The initial response to the launch of spot bitcoin ETF trading has been substantial, with approximately 700,000 transactions on the first day, totaling a trading volume of $4.33 billion. Notably, Grayscale’s bitcoin ETF contributed $2.1 billion, and BlackRock’s fund added another $1 billion to this impressive volume.
Despite a momentary dip in bitcoin’s price to around $49,000 on the first day of trading, Kar Yong Ang, the Octa financial market analyst, emphasizes that the overall uptrend appears stable on higher timeframes. He suggests that the consolidation of bitcoin’s price serves as a promising foundation for future gains, urging traders to explore buying opportunities before the upcoming bitcoin halving procedure in early April. Ang anticipates that bitcoin could resume growth and surpass the critical resistance level of $50,000 by the end of April 2024.
