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SEC ETF decisions: volatile crypto markets Where is the Hype?

Following SEC's ETF decisions, crypto markets' reactions are being examined

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After SEC ETF decisions: Actions of Crypto markets

What to know about SEC ETF DECISIONS LIST

Key Takeaways:

Bitcoin ETFs appeal to diverse ideologies with its vision of a decentralized, empowering financial system.

Its historical performance has been remarkable, attracting both long-term investors and speculative traders.

ETFs act as a bridge between traditional finance and the digital asset world, democratizing access to Bitcoin.

A balanced perspective is crucial, acknowledging both the potential and the risks associated with this volatile asset.

After SEC ETF decisions: Actions of Crypto markets

  • A multitude of proposals for a Bitcoin exchange-traded fund (ETF) have been submitted in the U.S.
  • Historically, the U.S. Securities and Exchange Commission (SEC) has consistently rejected all applications for a spot market Bitcoin ETF.
  • Since the initial filing in 2013, a spot Bitcoin ETF has been a highly sought-after goal within the crypto community.

SEC Approval and Commencement of Trading

On January 10, the SEC granted approval for the first batch of 10 spot Bitcoin ETFs.

Trading for these ETFs officially commenced on January 11.

List of Spot Bitcoin ETFs

BlackRock’s iShares Bitcoin Trust (IBIT):

BlackRock, the world’s largest asset manager with over $9 trillion in assets under management as of Q1 2023, filed an application in June 2023.

Currently trading on NASDAQ with a standard fee of 0.25%. The fee is reduced to 0.12% for the initial $5 billion or the first 12 months, whichever comes first.

Coinbase is utilized as the crypto custodian and spot market data provider.

Grayscale Bitcoin Trust (GBTC):

Managed by Grayscale, the GBTC Bitcoin trust oversees well over 600,000 BTC, valued at nearly $28 billion.

Transitioned into a full-fledged Bitcoin spot ETF, featuring a 1.5% fee (down from 2%).

Coinbase serves as the crypto custodian and index provider.

Fidelity Wise Origin Bitcoin Fund (FBTC):

Fidelity filed an application in March 2021.

Currently trading on Cboe’s BZX with a standard fee of 0.25%. The fee is waived until August 1, 2024.

Fidelity self-custodies the Bitcoin underlying the ETF.

Bitwise Bitcoin ETF (BITB):

Bitwise filed its spot Bitcoin ETF application in October 2019.

Currently trading on NYSE Arca with the lowest fee among current spot offerings at 0.20%. The fee is entirely waived for the first $1 billion worth of assets or a six-month period, whichever comes first.

Coinbase is the crypto custodian, while BNY Mellon is both the administrator and the trust custodian.

WisdomTree Bitcoin Fund (BTCW):

WisdomTree, a New York-based asset manager, filed in March 2021.

Currently listed on Cboe under the BTCW ticker with a standard fee of 0.3%, waived entirely for the first six months or until $1 billion worth of assets are traded.

Coinbase serves as the crypto custodian.

Invesco Galaxy Bitcoin ETF (BTCO):

Joint filing by Galaxy Digital and Invesco in September 2021.

Currently trading on Cboe BZX with a standard fee of 0.39%. Sponsor fees are covered for the first six months of operation up to $5 billion worth of assets.

BNY Mellon is the transfer agent and cash custodian, while Coinbase handles crypto custody.

Valkyrie Bitcoin Fund (BRRR):

Valkyrie filed its first Bitcoin ETF application in January 2021.

Currently trading on the NASDAQ with a standard fee of 0.25%. Valkyrie fully waives its sponsor fee for three months.

Uses Coinbase as the prime broker and Bitcoin custodian, with U.S. Bank as the cash custodian.

Ark 21Shares Bitcoin ETF (ARKB):

Ark Invest filed its application in June 2021, partnering with Swiss-based ETF provider 21Shares AG.

Currently trading on Cboe’s BZX Exchange under the ticker symbol ARKB with a fee of 0.21%. Sponsor fees are entirely waived for six months or until it hits $1 billion in assets, whichever comes first.

Coinbase is the crypto custodian.

VanEck Bitcoin Trust (HODL):

VanEck, one of the earliest Bitcoin ETF applicants, filed its first attempt in 2018.

Currently trading on Cboe with a 0.25% fee. Unlike others, Gemini is the custodian of the Bitcoin.

Jane Street, Virtu Americas, and ABN AMRO Clearing are authorized participants.

Franklin Bitcoin ETF (EZBC):

Franklin Templeton, one of the world’s largest asset managers, joined the race in September 2023.

Currently listed on Cboe BZX with a fee of 0.29%.

Coinbase serves as the fund’s custodian, with Jane Street and Virtu Americas listed as authorized participants.

Hashdex Bitcoin ETF:

Hashdex, the largest crypto asset management firm in Latin America, entered the fray in August 2023.

The transition of Hashdex Bitcoin Futures ETF (DEFI) to a spot ETF will happen at a later date.

Utilizes an unusual strategy, obtaining spot Bitcoin from within the regulated CME.

Currently trading on NYSE Arca with a 0.94% fee, featuring the second-largest fee after GBTC.

Jane Street, Macquarie, and Virtu Americas are authorized participants.

Bitcoin Futures ETFs:

While spot Bitcoin ETFs gained approval recently, the SEC approved Bitcoin futures ETFs back in 2021.

Currently trading Bitcoin futures ETFs include ProShares Bitcoin Strategy ETF (BITO) and Bitwise Crypto Industry Innovators ETF (BITQ), both listed on NYSE Arca.

Key Drivers of Bitcoin ETF Popularity

Bitcoin ETFs are making waves in the financial world, attracting both seasoned investors and curious newcomers. But what exactly is driving this surge in popularity? Let’s unpack the key factors behind the rise of Bitcoin ETFs:

1. Bitcoin ETF: Freedom and Empowerment

Bitcoin’s core principle resonates deeply with individuals yearning for a decentralized, global currency. Its philosophy of financial autonomy, free from government or corporate control, taps into a diverse range of political ideologies, from libertarianism to those seeking a counterweight to growing surveillance and inequality. This vision offers a powerful message of empowerment, even if one doesn’t fully embrace the “Bitcoin revolution.”

2. A Proven Performer:

Bitcoin’s track record speaks for itself. While its price fluctuates wildly, it boasts a staggering increase in value over the past decade, making it one of the most successful financial instruments of recent times. This undeniable performance has cemented its status as a legitimate investment option, despite the inherent risks associated with its volatility.

3. BTC “Hodling” for the Future

The “hodling” philosophy, which advocates buying and holding Bitcoin for the long term, plays a crucial role in the appeal of ETFs. Even during temporary dips, hodlers believe in the long-term potential of Bitcoin, viewing these fluctuations as mere blips on a trajectory towards significant gains. Bitcoin ETFs facilitate this approach by providing a convenient and accessible way for a wider range of investors, including retail and institutional buyers, to participate in the Bitcoin market.

4. Beyond the Bitcoin ETF Hype:

It’s important to acknowledge that Bitcoin’s future is not guaranteed, and its price could potentially plummet. Additionally, as Adam Sommer points out, alternative avenues to crypto exposure exist through traditional investments like crypto-related stocks or mining companies. However, Bitcoin ETFs offer a unique blend of accessibility, potential for long-term growth, and alignment with a powerful philosophical ideal, making them a compelling proposition for many investors.

Bull vs. Bear: Investors Clash on ETF Impact

The highly anticipated arrival of Bitcoin ETFs in late 2023 ignited a firestorm of speculation – would they herald a new era of mainstream crypto adoption, or fizzle out as a mere blip on the volatile price chart? While it’s still too early to declare a definitive winner, the ongoing debate reveals fascinating insights into the complex landscape of digital assets and traditional finance.

Key Points:

Early Trading Volume Triumph: Proponents highlight the robust initial trading volume of over $10 billion in the first three days, exceeding the entire annual volume of all 2023 ETF launches combined. This surge suggests significant mainstream interest in accessing Bitcoin through established, familiar financial instruments.

Price Performance Dampens Hype: Critics point to the underwhelming price action since launch, with Bitcoin dipping nearly 10%. Early selling pressure from Grayscale Bitcoin Trust (GBTC) and net inflows falling short of sky-high predictions further fuel the “bust” narrative.

The Market Dictates the Narrative: As investor legend Richard Russell aptly stated, “Markets make opinions.” Ultimately, Bitcoin’s price trajectory will hold the key to the narrative’s direction. Sustained sideways or downward movement could hand victory to the “bust” camp, while a surge surpassing $50,000 or even touching all-time highs would solidify the ETFs’ reputation as a watershed moment for crypto.

Beyond the Binary:

Instead of framing the outcome as a simple “boom or bust” dichotomy, a more nuanced perspective paints a richer picture. The mere existence of Bitcoin ETFs signifies a pivotal step in bridging the gap between the cryptosphere and traditional financial institutions. Regardless of short-term price fluctuations, the ETFs have opened up new avenues for institutional and retail investors to gain exposure to Bitcoin, potentially laying the groundwork for further mainstream adoption in the future.

Bitcoin is Back: Reclaims 40k Dollars After Post-ETF Slump

Key Points:

  • Notional open interest in Bitcoin futures on the Chicago Mercantile Exchange (CME) has dipped by nearly $1.5 billion since the launch of spot Bitcoin ETFs in the U.S.

This decline is attributed to several factors, including:

  • Unwinding of long positions: Investors who bet on ETF approvals are closing their positions.Hedging by authorized participants: Entities involved in ETF launches likely hedged their exposure by selling CME futures or BITO shares.
  • This suggests a shift in market sentiment following the long-awaited arrival of spot ETFs

The highly anticipated launch of spot Bitcoin ETFs in the U.S. appears to have sparked a shift in the derivatives market, as evidenced by a steep decline in notional open interest for Bitcoin futures on the Chicago Mercantile Exchange (CME). According to Reflexivity Research, this $1.5 billion drop reflects the unwinding of bullish bets related to ETF approvals and hedging activity by authorized participants who facilitated the launches.

Prior to the ETF rollout, investors may have accumulated Bitcoin while simultaneously selling CME futures or BITO shares to mitigate potential risks. With the initial hype surrounding the launch subsiding, these positions are now being closed, leading to the observed decrease in open interest.

This trend offers intriguing insights into the evolving market dynamics following the landmark introduction of spot Bitcoin ETFs. While some may interpret the slump as a sign of waning enthusiasm, it could also indicate a healthy dose of risk management and market adjustment in the wake of a significant milestone.

After SEC’s ETF decisions: Actions of Crypto markets

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