Anyone can trade bitcoin (BTC): that’s the point of an open protocol like Bitcoin. So why is so much time and energy put towards getting alternative ways of accessing bitcoins? In particular, why is there so much hype around spot market bitcoin ETFs, or exchange-traded funds, especially when similar products (like “futures-based” ETFs and exchange-traded products, or ETPs) already exist?
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And yet, today, at the mere rumor that asset manager BlackRock’s bitcoin ETF was finally approved (it wasn’t), markets bounced up by $2,000 (and then down). Clearly there’s something like pent up demand for these traditional financial instruments, or at least money on the sidelines waiting to trade the news around ETFs.
See also: The Real Reasons the Grayscale Bitcoin ETF Decision Matters | Opinion
Cointelegraph, which tweeted out the story then picked up by closely-watched news aggregator accounts, got it wrong. BlackRock’s iShares application is still under review by the U.S. Securities and Exchange Commission (SEC), the company clarified. Market watchers were already primed to look for ETF-related stories, given the confirmed news a competitor ETF application from Grayscale is back in play, after the SEC missed its chance to respond to an appeals court.
In the case of BlackRock’s ETF application, much of the excitement is tied to the fact that it’s the largest asset manager in the world that did the filing and is interested to move deeper into crypto markets. BlackRock’s application alone was validation for the whole crypto industry, with comments made later by BlackRock CEO Larry Fink — who argued that a monetary asset untethered to any national government will become increasingly attractive — was sugar on top.
The desire for a spot market bitcoin ETF stems from the idea that many people, firms and funds who are interested in taking on exposure to bitcoin are not yet able to. A traditional financial wrapper for the novel bitcoin asset class would, therefore, act as a bridge to that sidelined capital. Some estimate billions of dollars could flow into a spot market bitcoin ETF. This is the theory, at…
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