The interest in the crypto world is now focused on BlackRock and their intention to file for a Bitcoin Spot ETF. I also believe that the recent rally is due to this development and the rumors spreading about Fidelity and Vanguard's interest in an ETF or creating a crypto exchange. But what exactly is an ETF, and will it be approved? And if so, when?
An Exchange-Traded Fund (ETF) is essentially a pool of BTC, in this case, that allows anyone to gain exposure to Bitcoin without having to buy and store it themselves. Instead, they can simply purchase shares of the ETF. In this scenario, BlackRock, acting as the middleman, would buy and store the Bitcoin in Coinbase on behalf of the investors.
ETFs are primarily used by institutional investors like pension funds. For individuals who are not well-versed in crypto, Bitcoin, cold storage, etc., an ETF makes things much easier since they can gain exposure to the asset's price without physically holding it themselves.
As for its approval, so far, there have been 33 filings for Bitcoin ETFs, all of which have been rejected by the SEC. The rejections were mainly due to two reasons: (1) insufficient evidence or analysis supporting the argument that arbitrage across Bitcoin platforms helps maintain global price alignment and eliminate price differences, and (2) lack of demonstration regarding the proposed methodology's resistance to fraud or manipulation, particularly considering Bitcoin platforms not included in the index.
https://cointelegraph.com/news/here-s-why-the-sec-keeps-rejecting-spot-bitcoin-etf-applications
If BlackRock files for an ETF, the SEC has until February 2024 to provide an answer. This means we have up to eight months until then, so the current sentiment and price increase may be premature, as is often the case in the crypto market.
For context, Bitcoin futures ETFs already exist, but a spot ETF is yet to be approved. I believe that BlackRock, being one of the most influential and powerful funds with significant resources and connections, can exert influence on high-ranking government officials. However, it remains doubtful that an SEC under Gary Gensler's leadership would approve a Bitcoin ETF after numerous rejections, considering the valid reasons behind them. It's worth noting that Gary Gensler's tenure as the head of the SEC will end in 2024, creating an opportune timing for potential approval.
Posted Using LeoFinance Alpha