#523
ETF, Finally!
Published:
Jan 22, 2024
Author:
Sarah Parsons Wolter
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On Jan 10, 2024 at 4pm EST, the SEC officially announced the approval of spot Bitcoin ETFs to begin trading in the US. In a dramatic turn of events, the announcement finally came after the SEC’s Twitter account was reportedly hacked a few days earlier, prematurely sharing the news. This approval was momentous and highly anticipated by investors, especially given the 3,845 days (over 10 years) it has taken since the filing of the first Bitcoin ETF registration statement. Following the announcement, Key Members of Congress applauded the SEC's approval of a spot Bitcoin ETF and called for an investigation into how the agency allowed its Twitter/X account to be compromised. The House Financial Services Subcommittee on Digital Assets held a hearing examining FSOC's impact on innovation last week.
Allowing Bitcoin to be traded as an ETF gives investors access to this asset class in a way that is regulated, cheaper, and more convenient. Since its approval, funds for the ETF has taken in ~$3b, according to Bloomberg. The first day of spot Bitcoin ETF trading saw over $1b in volume within 30 minutes of going live and ended the day with $4.47b in total volume. This volume, while impressive, has fallen short of broader investor expectations. However, banks like JP Morgan are expecting significant funds from other crypto products to rotate into Bitcoin ETFs. A report the bank published last Thursday estimates that these ETFs could attract up to $36b of inflow.
Of the existing inflows, Blackrock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund have so far attracted the most money, although Grayscale’s Bitcoin Trust (GBTC) remains the largest fund overall. While it is still early to gauge the volume coming into the Bitcoin ETF, most investors expect ETF providers to compete to reduce fees and attract capital. In the meantime, much of the infrastructure around usage, taxation and more still need to be built out. Hopefully it takes less than 3,845 days!
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