What is the launch of spot Bitcoin ETFs in the United States, for the cryptocurrency

The US Securities and Exchange Commission's (SEC) decision to approve spot Bitcoin ETFs is a game-changer in the industry, some analysts and crypto-asset followers believe.

According to them, the launch of exchange-traded funds with exposure to Bitcoin paves the way for widespread adoption of the cryptocurrency, increasing the sector's role in "mainstream" finance, which will support price growth. On the other hand, voices in the financial world, including the American market watchdog, are demarcating cryptocurrency and drawing attention to the risks that such investments involve.

• What did the SEC approve?

The Securities and Exchange Commission has approved applications for eleven spot Bitcoin ETFs, including from financial giants such as BlackRock or Fidelity. Essentially, an ETF is an easy way to invest in an asset or group of assets without the need for the investor to directly purchase the assets themselves. For example, the SPDR Gold Shares ETF allows anyone to invest in gold without having to have a place to store and protect the yellow metal, writes The Guardian.

According to Reuters, spot Bitcoin ETFs will be listed on Nasdaq, the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE), with the underlying Bitcoin asset to be bought from crypto exchanges and held through custodians, such as Coinbase Global. The products will track a Bitcoin benchmark or index provided by CF Benchmarks, which aggregates trading data from multiple markets operated by major exchanges.

To address the SEC's concerns about manipulation, Nasdaq and CBOE, along with Coinbase, the largest U.S. crypto exchange, have created a market oversight mechanism, according to Reuters.

It should be noted that for several years there have been Bitcoin ETFs in the United States, but with exposure to futures contracts of the cryptocurrency, not the asset in the spot (sight) market.

• Standard Chartered: "Inflows into ETFs could be between $50 and $100 billion in the first year of trading"

Analysts say spot Bitcoin ETFs will attract new classes of investors who have so far avoided or even been stopped by domestic regulations from taking exposure to the cryptocurrency, which will bring new money into the market and prop up prices. Also, the fact that Wall Street giants are launching ETFs on spot Bitcoin should give the asset class more credibility with traditional investors, according to Business Insider.

Geoff Kendrick, Head of Research - Foreign Markets at Standard Chartered, believes that the launch of ETFs on Bitcoin spot can take the price of the cryptocurrency to $200,000 by the end of 2025. According to Tom Lee, Head of research by Fundstrat, Bitcoin can reach up to 150,000 dollars in the next twelve months, the American publication also writes.

"If ETF inflows materialize as we expect, we believe it is possible for Bitcoin to be close to $200,000 by the end of 2025. That assumes between 437,000 and 1.32 million new Bitcoins are held in United States spot ETFs through the end of 2024," said Kendrick of Standard Chartered.

In his view, inflows into ETFs could be between $50 billion and $100 billion in the first year of trading. Some analysts believe that the impact of the launch of Bitcoin ETFs will be somewhat similar to that of the launch of gold ETFs almost 20 years ago. According to a report by the Bernstein brokerage house, the Bitcoin spot market will reach 10% of Bitcoin's current capitalization of around $900 billion in two to three years.

The first gold ETF increased demand for the yellow metal, a scenario that could be repeated in the case of the launch of spot Bitcoin ETFs. Since the launch of the first gold ETF, the price of the yellow metal has risen from around $332 to $1,800. There are currently about 35 gold ETFs listed on the US markets, with about $105 billion in assets under management, according to Coindesk.

• MarketVector Index: "Institutionals can allocate about 1% or more of their portfolio to a spot Bitcoin ETF"

Analysts believe there are premises for giants like Blackrock to direct their clients to allocate part of their portfolios to the Bitcoin ETF they offer.

"If institutional and financial advisors find the Bitcoin ETF as liquid and convenient as other popular ETFs, they could allocate about 1% or more of their portfolio to it," says Martin Leinweber, strategist at MarketVector Index. Mona El Isa, CEO of Avantgarde, believes that Bitcoin ETFs represent the fusion of two separate worlds: crypto and traditional finance.

"The approval of a spot Bitcoin ETF is of immense importance to the crypto industry. It has the potential to bring substantial capital to the market, potentially in the billions, as investors seek exposure to Bitcoin through a trusted and regulated vehicle," El Isa said, according to Coindesk.

"The approval of the ETF means a growing recognition of cryptocurrencies by traditional finance. It can lead to increased collaboration between the crypto space and Wall Street, ultimately transforming the industry as we know it."

• Caroline Crenshaw, SEC: "These products will flood the markets and go straight into the retirement accounts of American families who can least afford to lose their savings"

While the crypto industry celebrates the much-anticipated Bitcoin spot ETFs, there are voices criticizing the US market watchdog's decision this week.

Even SEC officials have expressed concern about the effects that the launch of such products may have. "I am concerned that these products will flood the markets and go straight into the retirement accounts of American families who can least afford to lose their savings to the fraud and manipulation that seems rampant in the Bitcoin spot markets; they will impact ETPs," wrote Caroline Crenshaw, one of the two commissioners who voted against the approval, according to Cointelegraph.

Better Markets, a nonprofit economic organization, has described Bitcoin as a worthless and purposeless asset. "The SEC decision did not change anything about this worthless financial product; "Bitcoin and crypto still lack a legitimate use, remain the product of choice for speculators, gamblers and criminals, and continue to be a hotbed of fraud, manipulation and criminality," Better Markets wrote in a former Twitter post.

Even the SEC has distanced itself from Bitcoin, through the voice of Chairman Gary Gensler. "Although we have approved the listing and trading of certain products on Bitcoin spot, we have not approved and do not endorse Bitcoin. Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto," Gensler said, according to Business Insider.

Over the past twelve months, Bitcoin has seen an increase of about 160%, in the context of the launch of ETFs on Bitcoin spot and the approach of the date of the next "halving" of the cryptocurrency.