The SEC approved spot Bitcoin ETF on January 10, 2024, and the crypto community is rejoicing after the news was made official.
On a historic day for the cryptocurrency realm and the crypto community in general, the United States Securities and Exchange Commission (SEC) officially approved the spot Bitcoin Exchange-traded Funds (ETF) applications for all eleven filers of the ETF applications.
The firms who filed for spot Bitcoin ETF application included names like BlackRock, Grayscale, Bitwise, Fidelity, Valkyrie, Ark 21Shares, Invesco Galaxy, VanEck, WisdomTree, Hashdex, and Franklin Templeton.
The last hurdle for all eleven firms was the submission of the amended form 19b-4 application, which they submitted a few days before the deadline. Once all the necessary amended applications were introduced, the ball fell onto the SEC’s court to approve the applications on the deadline they stated.
On January 10, the SEC approved the applications and the rule changes that allowed the spot Bitcoin ETFs to be listed and traded on the respective exchanges selected by the firms.
The false approval on January 9
Before the SEC approved, however, drama folded on the previous date of January 9 when someone hacked into the SEC X (formerly Twitter) account and posted the announcement on behalf of the SEC that the firm had approved all the spot Bitcoin ETF applications.
The SEC got wind of the hack 15 minutes later, and Gary Gensler, the head of the SEC, immediately refuted the news. The SEC retracted it, stating that their social media account was compromised and no one who holds the authority to make posts on that account committed any such act.
Two United States senators shared their displeasure with what transpired on January 9. They asked the SEC to conduct an investigation and present a report in front of the U.S. Congress to explain what happened.
The crypto community also didn’t like that the regulatory authority, who always tried to make an impression on everyone to abstain from illegal activities and secure their funds and accounts, couldn’t manage to keep their account secure in the first place.
The X security team later revealed that someone managed to get hold of the number through which the account was registered and obtained the password from there. The SEC hadn’t enabled two-factor authentication (2FA), which was the reason why their account got compromised.
The SEC said that they are availing the help of the Federal Bureau of Investigation (FBI) to identify the source of the attack and apprehend the culprit.
What is spot Bitcoin ETF, and what does getting the approval mean?
A spot Bitcoin ETF refers to an investment vehicle that allows investors to gain exposure to the price movements of actual Bitcoin in the spot market.
In the context of cryptocurrencies, the term spot essentially means the immediate purchase or sale of the underlying asset for delivery and settlement within a short period, usually a few days. Unlike futures contracts or other derivatives, a spot ETF holds the physical asset it represents, in this case, Bitcoin. The structure provides investors with a direct and secure way to invest in Bitcoin without needing to hold and manage the digital currency themselves.
The approval of spot Bitcoin ETF applications by the U.S. Securities and Exchange Commission (SEC) is significant for the cryptocurrency market.
The SEC’s approval signals a growing acceptance and recognition of Bitcoin as a legitimate asset class, potentially attracting institutional investors who were previously hesitant to enter the cryptocurrency space due to regulatory uncertainties.
The availability of a spot Bitcoin ETF offers a more regulated and mainstream investment avenue for institutions, providing them with the opportunity to participate in the cryptocurrency market without the complexities of managing digital assets directly.
The news is ultimately very positive not only for Bitcoin but the crypto market in general because getting the approval from the SEC was believed to be the catalyst the crypto market needed to start a bullish momentum that would see new highs being formed on the crypto charts.
It has been a long wait.
It was a long journey for the proponents of spot Bitcoin ETF to finally witness the SEC approving this investment vehicle. Since 2013, the journey toward a spot Bitcoin ETF in the U.S. has been marked by regulatory challenges.
The Winklevoss twins and Grayscale made early attempts but faced SEC rejections, citing market maturity concerns. The Winklevoss twins submitted their first application in 2013, while Grayscale made their submissions in 2016. Both entities didn’t get the approval from the SEC at the time.
In 2018, the SEC rejected the Winklevoss twins’ second application due to exchange control issues. In 2021, Canada launched the first-ever spot Bitcoin ETF, while the U.S. saw approval for a futures-based ProShares Bitcoin Trust.
Grayscale faced SEC rejections in 2022, leading to a lawsuit. In 2023, ARK Investments and BlackRock filed spot Bitcoin ETF applications, triggering optimism.
A federal court ruled in Grayscale’s favor in August of 2023, which finally pivoted the balance of scales towards the firms who filed for the listing of spot Bitcoin ETF.
Finally, on January 10, 2024, the SEC approved 11 spot Bitcoin ETF proposals, including those from BlackRock, Fidelity, and VanEck, marking a significant milestone in the evolution of cryptocurrency investment products in the U.S.
Spot Bitcoin ETF begins trading on Exchanges.
After the Bitcoin ETFs were approved to be listed on exchanges, they made their debut on different exchanges that the respective firms selected to represent their investment vehicle on their platform.
On January 11, data from Cboe BZX Exchange showed that ARK 21Shares Bitcoin ETF shares were trading at $50.18. The ticker for ARK’s ETF is named ARKB. On the other hand, Invesco Galaxy’s Bitcoin ETF was trading at $49.59 under the ticket BTCO.
WisdomTree’s BTCW was standing at $52.13, while Fidelity’s FBTC had the figures of $44.40. VanEck’s Bitcoin ETF, under the ticker HODL, was not yet listed on the exchange but is believed to start trading at an opening price of $54.92. Franklin Templeton’s EZBC was sitting at $28.48.
Note: these figures were noted at the time of writing this article and are subject to change. To get the accurate value, you can visit the websites of the respective exchanges.
Trading data on the Nasdaq Stock Exchange saw the Valkyrie Bitcoin Fund’s shares, identified by the ticker BRRR, commence at approximately $20 in the pre-market. However, they later declined to $14.10 as of the time of current publication.
Concurrently, the iShares Bitcoin Trust, managed by the global asset giant BlackRock and traded under the symbol IBIT, experienced a notable 22% surge in pre-market activity, reaching $28.64.
Grayscale Investments’ spot Bitcoin ETF initiated trading at $42.25 on the New York Stock Exchange Arca with the ticker GBTC. At the time of writing this article, the price has risen to $42.97.
Meanwhile, the Bitwise Bitcoin Trust began trading at $26.80 under the ticker BITB. The Hashdex Bitcoin Futures ETF, which also holds spot BTC and was approved by the SEC, commenced trading at $60.00 with the ticker DEFI.
Bitcoin spot ETF hit $1.6B trading volume in minutes
Before the ETFs were listed on the exchanges, different analysts gave their forecasts of what price action everyone could expect once trading of these ETFs commenced.
Galaxy Research’s Alex Thorn anticipated spot Bitcoin ETF inflows of $14 billion in the first year, while VanEck estimated $2.4 billion for Q1 2024.
BlackRock says it plans a 0.2% fee until $5 billion AUM, Bitwise at 0.24%, and Ark 21Shares and VanEck at 0.25%.
Ark 21Shares says it will waive fees for the first six months or until $1 billion AUM. In contrast, Grayscale’s Bitcoin ETF is charging the highest fee at 1.5%.
Now, these were the numbers given before the trading commenced on exchanges. Once these spot Bitcoin ETFs were listed, they went off to an astonishing start. In just a few minutes after trading started, the total trading volume reached around $1.6 billion in just a few minutes.
Among the ten registered ETFs, leading contenders include Grayscale (GBTC), Blackrock (IBIT), Fidelity (FBTC), and Ark (ARKB), with respective market capitalizations of approximately $667.55 million, $475.6 million, $291.1 million, and $117.8 million as of the latest update.
It’s noteworthy that trading volumes are dynamic, ranging from over $2 billion to fluctuating levels as orders are processed.
The crypto community is now anticipating the potential approval of a spot Ethereum ETF, with BlackRock having filed for one in November 2023. The SEC is expected to decide by May 23, 2024, and the consensus is optimistic toward getting approval, especially once the precedent is set after the spot Bitcoin ETF gets its authorization now.
First Day Trading volume surpassed $4.5Billion
The first day of trading for spot Bitcoin ETFs turned out to be a success, and we are basing our assessment on the figures shared by Yahoo Finance. The spot Bitcoin ETFs topped $4.5 billion in volume on the opening day, surpassing everyone’s expectations.
Grayscale’s ETF, the Grayscale Bitcoin Trust (GBTC), alone recorded a total volume of $2.2 billion, which is an astonishing figure.
BlackRock’s Bitcoin ETF, the iShares Bitcoin Trust (IBIT), was another top performer among newly listed funds, handling over $1 billion in volume on its first day, which accounted for 22% of the total volume within the group.
Fidelity’s spot Bitcoin ETF closely followed with approximately $685 million in day one trading volume.
However, one firm didn’t have the start to their day as everyone else, as Hashdex’s BTC ETF did not commence trading on January 11.
Although the United States Securities and Exchange Commission approved Hashdex’s 19b-4 filing, allowing its spot ETF product to be listed on U.S. stock exchanges, the SEC did not make its Form S-1 effective.
Consequently, Hashdex’s DEFI fund is currently only trading as a futures-based ETF. The company clarified that the fund does not hold any spot Bitcoin in its portfolio.
The reported trading volume encompasses both inflows and outflows, providing an overview of the day’s trading activity without specifying the proportion of buying versus selling.
Senior Bloomberg ETF analyst Eric Balchunas suggested that a significant portion of GBTC’s trading activity was selling as investors shifted away from the fund to newer, lower-fee products like BlackRock’s and Fidelity’s respective ETFs.
Timothy Peterson, an investment manager associated with Cane Macro, approximated that the collective buying activity observed across the ETFs would necessitate the acquisition of around 47,000 Bitcoins in the spot market. At present market prices, this would amount to approximately $2.1 billion.
Final Thoughts after SEC Approved Spot Bitcoin ETF
The listing of the spot Bitcoin ETFs on exchanges concludes the chapter of watching the SEC trying to quash the evolution of the cryptocurrency market.
The crypto community has been celebrating the news as many believe that this will give the long-awaited push the market needs to move to newer heights.
But before jumping on the celebration bandwagon, we would like to remind everyone about the risks associated with cryptocurrency trading and the crypto market in general.
Investing in Bitcoin ETFs provides regulatory oversight and convenience for traditional investors, potentially offering diversification beyond Bitcoin.
The choice between investing in Bitcoin directly and investing in spot Bitcoin ETFs depends on factors like individual risk tolerance, knowledge, and experience.
Neither option is inherently safer, so investors should conduct thorough research and consider their preferences and circumstances before deciding which approach to take.
