North America’s first Bitcoin ETF was approved by Canadian securities regulators earlier this year.
It has been a no-looking-back scenario ever since. By mid-April, the Purpose Bitcoin ETF
had attained the US$1 billion mark. These billion-dollar assets were a culmination
of a record-breaking streak of the ETF after it was listed on the Toronto Stock Exchange (TSX).
The US Bitcoin ETF might be a reality soon
Reportedly, the US securities regulator SEC is likely to approve the first Bitcoin futures
ETF in October 2021. This speculation is backed by an SEC tweet in which it advises investors
to “carefully weigh” risks before they decide to park money in any such product.
What is a Bitcoin Exchange Traded Fund (ETF)?
ETFs, in particular, track the movement in the price of any underlying asset. Some ETFs can
also have more than one underlying security, which allows diversification for investors.
In the case of a Bitcoin ETF, the investors can evade crypto exchanges like Coinbase and Binance,
and invest in the traditional market. It is usually safer to deal in the conventional market
considering regular crackdowns on crypto exchanges in multiple countries.
SEC’s approval of a Bitcoin-related ETF
Recently, the SEC approved an ETF -- not a pure Bitcoin ETF -- that
tracks movement in prices of stocks having exposure to BTC.
The underlying securities relate to companies that derive most of their revenue from Bitcoin-related
activities. These can include BTC mining or the manufacturing of rigs. The Volt
ETF is said to be placing 80 per cent of its assets in companies undertaking BTC activities.
How has Bitcoin performed so far?
Big, long-term investors saw value, and as a result,
MicroStrategy bought new 5,050 Bitcoins last month. This investment took the
NASDAQ-listed business intelligence company’s total BTC holding to 114,042.
Elon Musk’s Tesla also holds 38,300 BTC, with the average price per BTC estimated as US$34,700.
Despite the negative sentiments hitting the crypto market after China’s crackdown,
Bitcoin’s YTD gains are promising. But the ride had a few hiccups after BTC nearly touched the
US$65,000 price tag in April.
The Bitcoin ETF might boost BTC’s price
Analysts believe that the listing of the first Bitcoin ETF in the US might be a watershed moment.
Ever since the news of the approval of the Volt ETF broke in early October,
BTC has been gaining traction. It could just be a matter of a few days
or weeks that BTC surpasses its all-time high, given that the momentum sustains.
Conclusively
The launch of the first-ever Bitcoin ETF in the US will be a significant moment
for the entire crypto space and its backers. This is likely
to lift the spirits of both short-term and long-term BTC investors.