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recorded in history! Bitcoin Spot ETF Passed, Opening a New Chapter for the Crypto Industry

Kaoriand others2Authors

24-01-11 05:18

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This is a historic moment in the history of Bitcoin and the entire cryptocurrency market. The spot Bitcoin ETF has finally been approved, opening a new chapter for Bitcoin.

The first batch of spot ETFs, who are they?

On January 11th at 4am, the US Securities and Exchange Commission (SEC) approved 11 Bitcoin ETFs, including:

Grayscale Bitcoin Trust

Bitwise Bitcoin ETF

Hashdex Bitcoin ETF

iShares Bitcoin Trust

Valkyrie Bitcoin Fund

ARK 21Shares Bitcoin ETF

Invesco Galaxy Bitcoin ETF

VanEck Bitcoin Trust

WisdomTree Bitcoin Fund

Fidelity Wise Origin Bitcoin Fund

Franklin Bitcoin ETF

Among these lists and applicants, Grayscale (GBTC) stands out with its asset management scale of about 46 billion US dollars, while iShares under Blackrock also ranks in the industry's leading position with its huge asset management scale of 9.42 trillion US dollars. Following closely behind is ARK 21Shares (ARKB), which manages about 6.7 billion US dollars in assets. In comparison, Bitwise (BITB) has a smaller scale but still manages about 1 billion US dollars in assets under management.

Other important participants include VanEck, which manages approximately $76.4 billion in assets; WisdomTree (BTCW) with $97.5 billion in assets under management; Jingshun Invesco Galaxy (BTCO) and Fidelity (Wise Origin), which manage $1.5 trillion and $4.5 trillion in assets respectively.

Among them, the spot ETF applications of BlackRock and ARK Invest have been the most talked about in the market.

Only One Mistake: BlackRock

In retrospect, the application of BlackRock for a Bitcoin spot ETF in 2023 was seen as a significant turning point in the bull and bear trends of the cryptocurrency market. As an asset management company with assets under management exceeding $10 trillion, BlackRock's managed assets even exceeded Japan's GDP of $4.97 trillion in 2018. BlackRock, Vanguard Group, and State Street Bank were once known as the "three giants," controlling the entire index fund industry in the United States.

More importantly, BlackRock has an impressive track record in obtaining SEC approval for its ETF applications. According to historical data, BlackRock has a success rate of 575 out of 576 ETF applications approved by the SEC, meaning only one was rejected.

Therefore, when BlackRock submitted its Bitcoin spot ETF filing to the US SEC in June, it caused quite a stir in the community. It is widely believed that BlackRock's entry means that the approval of a Bitcoin spot ETF is inevitable.

Recently, BlackRock invested $10 million in seed funding for its Bitcoin spot ETF on January 3, 2024, which is a significant increase from the initial $100,000 invested in October. This move demonstrates BlackRock's commitment and expectations for the launch of the Bitcoin spot ETF. The ETF is named iShares Bitcoin Trust and will trade on the stock market under the ticker symbol IBIT once launched.

In addition, BlackRock has actively communicated with the US Securities and Exchange Commission (SEC) to address regulatory issues surrounding its Bitcoin spot ETF application. After discussions with the SEC, they submitted an updated/revised S-1 form and have met with the SEC multiple times in the past month. BlackRock has also adjusted its approach from a physical to a cash mode to comply with SEC requirements, demonstrating their flexibility and proactivity in complying with regulatory standards.

ARK Invest, the one that came out on top later

Among the earliest on this list, Ark Invest is included as expected.

Last October 12th, Eric Balchunas, a senior ETF analyst at Bloomberg, stated on social media that ARK had submitted an updated prospectus for its Bitcoin spot ETF. At the time, he noted that while approval may not come immediately, the back-and-forth communication with the SEC was a very positive sign.

Meanwhile, since August last year, Ark Invest has gradually reduced its holdings in GBTC. At that time, many people speculated that the shrewd Cathie Wood was preparing for her own Bitcoin spot ETF fund by reducing her holdings in GBTC.

According to the holding data of ARK Invest's Ark Fund, the fund sold a total of 146,242 shares of GBTC in October without any purchases. In September, the fund bought 11,249 shares of GBTC but sold 67,494 shares. In August, the fund bought 106,413.91 shares of GBTC but sold 108,776.24 shares.

In December, according to analysts at Bloomberg, ARK Invest has sold over 2 million shares of Grayscale Bitcoin Trust (GBTC) and completely liquidated its remaining GBTC position. Instead, it has used approximately half of the funds, around $100 million, to purchase shares of ProShares Bitcoin Strategy ETF (BITO).

现货 ETF 通过，比特币及加密货币进入历史新起点

Spot ETF approved, Bitcoin and cryptocurrencies enter a new historical milestone

The importance of Bitcoin spot ETF is mainly reflected in two aspects. First, it improves accessibility and popularity. As a regulated financial product, Bitcoin ETF provides an opportunity for a wider range of investors to obtain Bitcoin. With Bitcoin spot ETF, financial advisors can start guiding their clients to invest in Bitcoin, which is significant for the wealth management industry, especially for those capital that cannot directly invest in Bitcoin through traditional channels.

The second is to obtain regulatory recognition and enhance market acceptance. SEC-approved ETFs will alleviate investors' concerns about safety and compliance because they provide more comprehensive risk disclosure. A more mature regulatory framework will attract more investment. This regulatory clarity is crucial for market participants and helps them conduct business in the cryptocurrency industry.

The approval of Bitcoin spot ETF undoubtedly marks a new historical starting point for Bitcoin and cryptocurrencies. We can also gain insight into the current market sentiment through data such as the estimated market size of Bitcoin spot ETF and the estimated performance of Bitcoin prices.

Bitcoin Spot ETF Market Size Estimate

ProShares' Bitcoin Strategy ETF BITO has surpassed $2 billion in assets under management. BITO attracted a net inflow of $506 million in 2023 and attracted a capital inflow of $30 million in the first eight days of 2024. This demonstrates the strong ability of Bitcoin spot ETFs to attract funds.

According to a report by Galaxy Digital in October 2023, the approval of a Bitcoin ETF could have a direct impact on the US wealth management industry. The accessible market for a Bitcoin ETF and the indirect impact and coverage of its approval will extend far beyond US wealth management channels (such as international markets, retail markets, other investment products, and other channels), and may attract more funds into the Bitcoin spot market and investment products.

If we assume that Bitcoin is adopted by 10% of the total available assets in each wealth channel, with an average allocation of 1%, then the Galaxy Digital report estimates that there will be a capital inflow of $14 billion in the first year after the release of the Bitcoin ETF, increasing to $27 billion in the second year, and reaching $39 billion in the third year after the release.

In addition, the second-order effect of the approval of Bitcoin ETF may have a greater impact on global Bitcoin demand. It is expected that other countries will also follow in the footsteps of the United States and approve and launch similar Bitcoin ETF products to meet the needs of a wider range of investors. In the long run, as Bitcoin becomes more monetized, its market share in different asset classes may increase, thereby expanding the market size of Bitcoin.

Bitcoin Price Performance Forecast

Bitcoin is known as "digital gold", both of which are considered a means of storing value. Due to this association, the market generally believes that studying the development history and historical trends of gold ETFs is of great significance for predicting the future trends of Bitcoin ETFs.