SEC Approves Bitcoin ETF, Marking Historic Day for Crypto
October 15 2021 - 5:36PM
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Since the first meteoric rise of Bitcoin in 2017, asset managers
and investment firms have looked to seize the opportunity in the
growing space, attempting to bring Bitcoin to Wall Street. Of
course, the majority of these efforts (if not all) were futile –
caused by waning demand during downturns, opposition from
government entities, or the general uncertainty surrounding
crypto’s future as an asset class. But now, with Bitcoin gaining
approval from the public, institutions, and even nations like El
Salvador, it only seems right for crypto to finally cement its
legitimacy. Bitcoin ETF Finally Gains Approval from the SEC
Earlier today, the Securities and Exchange Commission (SEC) finally
announced that it had approved the first ever Bitcoin Futures ETF
in the United States. This is following months of deliberation and
delays, with the commission delaying its verdict on at least a
dozen or more additional Bitcoin ETF applications. Proshares, the
asset management firm that filed its Bitcoin Strategy ETF earlier
this summer, is set to launch as early as next week. In its amended
prospectus updated on Oct. 15, Proshares stated that its ETF is
expected to launch on Monday, Oct. 18. Without a doubt, this
is a historic moment for the cryptocurrency space. Serving as a
regulated alternative to directly holding the underlying digital
asset, an accessible Bitcoin ETF will mean an influx of funds from
retail and institutional investors alike. ProShares’ Bitcoin ETF
will function similarly to that of Grayscale’s GBTC, where the
exchange traded fund will track Bitcoin futures, rather than the
price of the Bitcoin directly. SEC Chair Gary Gensler stated that
future-based products will likely provide stronger investor
protections due to the stringent securities laws they must operate
under. As a futures-based product, there may be potential
premiums or discounts relative to the net asset value (NAV).
However, the Proshares’ ETF has a management fee of 0.95%, which is
considerably lower than GBTC’s 2%. This, coupled with GBTC’s
stringent redemption periods and deviation from the NAV, will
likely lead to a mass rotation of funds from the GBTC to ProShares’
ETF. Breaking Down Bitcoin’s Price Action The aforementioned
news sent the crypto markets higher, with Bitcoin nearing its
all-time high price of $63,000. Earlier today, the price of BTC
peaked at $62,600. At press time, Bitcoin is priced at $61,300
– up 6.36% in the past 24 hours alone. According to
CoinMarketCap, the major cryptocurrency has reclaimed its $1
trillion market capitalization, comfortably sitting at $1.15T.
Ethereum and other major altcoins reacted positively to the news,
closing in on their respective all-time high prices. Featured image
from UnSplash
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