Why Bitcoin ETFs a big deal? 🤔🤷♀️
11 ETFs signal legitimacy, wider access, and institutional adoption. Gold ETFs' success story parallels Bitcoin ETF hopes. ETF hype leads to Bitcoin price dip?
Hello, y'all. If you think you know your music, then this is for you frens👇
If you think you can boss it, a $500 Apple gift card is for you to win frens 🎁
A complete go. Check out 👉 Asset - Music Nerd.
This is The Token Dispatch 🙌 you can hit us on telegram 🤟
11 spot Bitcoin Exchange-Traded Funds (ETFs) approved by the Securities and Exchange Commission (SEC) on January 10, 2024.
Read this: Bitcoin ETF approved ✅ Hallelujah.
Marks a watershed moment for the cryptocurrency world, particularly for Bitcoin.
Read this: First day blockbuster 👊🏼💥🔥
What is it all about?
Decoding Bitcoin ETFs
Before diving into the significance of this approval, let's demystify Bitcoin ETFs. Unlike traditional ETFs that track stocks or bonds, Bitcoin ETFs track the price of Bitcoin.
Investors purchase shares of these ETFs on regular stock exchanges, gaining exposure to Bitcoin's value without directly buying and storing the cryptocurrency.
This eliminates complexities of setting up crypto wallets, navigating crypto exchanges, and managing security concerns - That's the best part.
Two main types of Bitcoin ETFs exist👇🏻
The newly approved ETFs fall under spot bitcoin category.
Without these ETFs, institutional investors have limited options for investing in Bitcoin. Most lack the infrastructure to hold Bitcoin directly or trade it on existing exchanges. They've had to resort to futures ETFs or closed-ended funds, which come with high fees and downsides.
A Little Timeline First
2013: Winklevoss twins try for the first-ever spot ETF, but the SEC says nah.
2014-2017: More proposals, more rejections. Still, Bitcoin keeps chugging along.
2018-2019: Still waiting, but Bitcoin starts attracting big names like Fidelity.
2020: Bitcoin booms, ETF whispers get louder. SEC starts cracking open its ears.
October 2021: FINALLY! First Bitcoin Futures ETF launches, opening the door.
2022: More keys unlock! Several US spot ETF applications submitted.
January 10, 2024: BOOM! 11 spot Bitcoin ETFs approved in one glorious day!
Now: 11 new rockets taking off, carrying investors toward Bitcoin in a smoother ride.
The Power of 11
The SEC's approval of 11 spot Bitcoin ETFs signifies a seismic shift in the regulatory landscape. Why?
Legitimacy Boost: Bitcoin graduates from niche to legit, attracting big financial players who were previously on the fence.
Wider Access: ETFs open the door for more investors, smoothin' out price moves and injectin' sweet, sweet liquidity.
Institutional Playground: Pension funds and bigwigs can now dabble in Bitcoin, expandin' the market and fuellin' growth.
Safer Ride: Investor protection steps up, makin' the crypto rollercoaster a bit less...harrowing.
How do Bitcoin ETFs work?
Think of them like piggy banks holding Bitcoin instead of coins. You buy shares, not the actual Bitcoin itself. It's like owning a piece of the pie, not the whole bakery.
An ETF issuer, usually an asset management company, goes out and buys the actual Bitcoins and stores them securely with a custodian. Then, they issue shares of their fund to the public, giving investors indirect access to the Bitcoin held in the fund.
For this service, the financial institution charges an annual management fee. In exchange, they handle all the nitty-gritty stuff like buying, storing, and keeping Bitcoin safe on behalf of the ETF's investors.
When you invest in a Bitcoin ETF, you're essentially buying shares in a pool of Bitcoin. If more people want in, they create more shares. If you sell, your shares get redeemed, adjusting the total number of ETF shares in circulation.
Gold ETFs: A Historical Success Story
Let's first look at Gold ETFs' journey to understand the hype around Bitcoin ETFs. When exchange-traded funds for gold were introduced in the early 2000s, they were met with optimism and skepticism. Fast forward to today, over $100 billion is invested in gold ETFs traded in the US, making gold accessible to investors with a simple click, free from the need for vaults or armed guards.
Now, the crypto community is placing similar hopes on Bitcoin ETFs. Standard Chartered forecasts Bitcoin's price doubling to $100,000 this year, driven by the approval.
Bitcoin and gold correlation rises in 2023: Fidelity report
Historically non-correlated, Bitcoin and gold recently show parallel trends.
Possible drivers include US fiscal deficits and anticipation of changes in interest rates.
Gold's performance in US dollars rose to 14.6% in 2023.
Bitcoin saw a significant gain of 156% over the same period.
The ProShares approval
In October 2021, history was made when the SEC approved the ProShares Bitcoin Strategy ETF (BITO), the first-ever Bitcoin futures ETF in the US. This wasn't a direct Bitcoin ETF, but it was close enough to send shockwaves through the crypto world.
Launched by ProShares, a veteran ETF issuer, BITO offered institutional and retail investors a regulated way to gain exposure to Bitcoin's price movements without actually buying and holding the cryptocurrency.
Bitcoin's price surged over 6% in the 24 hours following the BITO announcement, reaching a new all-time high above $66,000.
Bitcoin Dips to $42K
With all the ETF hype, Bitcoin's price dropped to about $42,000, a nearly 10% decline.
Previous Highs: Bitcoin had reached $46,000 and surged to a two-year peak of $49,000 in the same week when ETFs started trading.
Read: Tears follow Euphoria 😔😭
But Cathie Wood sees bitcoin reaching $1.5M by 2030.👇🏻
But this dude👇🏻
TTD Week That Was 📆
Saturday: Tears follow Euphoria 😔😭
Friday: First day blockbuster 👊🏼💥🔥
Thursday: Bitcoin ETF approved ✅ Hallelujah.
Wednesday: Who's gonna protect SEC? 🪖
Tuesday: Fingers Crossed🤞🏿
Monday: Wait a bit more ⌛
TTD Week in Funding 💰
SkyArk Chronicles. $15 million. Triple-A game creation system and online gaming platform.
Tune.FM. $20 million. Web3 decentralized music streaming platform & music NFT marketplace.
Finoa. $15 million. Germany-based crypto custodian and staking services provider.
If you like us, if you don't like us .. either ways do tell us✌️
If you dig what we do, show us love on Twitter, Instagram & Threads🤞
So long. OKAY? ✋