The U.S. Securities and Exchange Commission (SEC) approved a Bitcoin ETF (more specifically, a Bitcoin spot ETF) on January 10, ET.
Since 2013, when the Winklevoss brothers, famous investors, applied for a Bitcoin ETF (exchange traded fund) in the US, various companies have applied, but the SEC has rejected all of them.
In 2021, with the inauguration of the Biden administration, Gary Gensler, who is well versed in crypto assets (virtual currencies), was appointed as SEC chairman, leading to several waves of applications, but the results were not as expected by the industry. It was against the. In 2022, as the market turned into a bear market, the enthusiasm for it cooled down and it was no longer talked about.
However, in June 2023, BlackRock, the world’s largest asset management company, suddenly applied for a Bitcoin ETF. The filing of a major traditional finance (TradFi) application raised expectations for approval and put it back in the headlines. The market also responded positively to BlackRock’s application, and Bitcoin has more than doubled since the beginning of the year.
New Bitcoin demand
Bitcoin ETFs can be purchased by anyone with a brokerage account (at least in the US), without having to open an account at a cryptocurrency exchange. Instead of purchasing Bitcoin directly on an exchange, you can invest in Bitcoin more easily by purchasing a Bitcoin ETF created by BlackRock and listed on the Nasdaq.
Institutional investors such as life insurance and pension funds, which have had difficulty investing directly in Bitcoin, can now invest in Bitcoin ETFs because they are financial products approved by regulators and the stock market. When life insurance and pension funds buy Bitcoin ETFs, it means that many people (including those who are not even aware of Bitcoin ETFs) are indirectly investing in Bitcoin.
On the other hand, new demand will be created for Bitcoin. In this case, BlackRock will be purchasing a large amount of Bitcoin to create an ETF, creating new “buying pressure.” These expectations were reflected in the continued listing of Bitcoin prices in the wake of BlackRock’s ETF application. Bitcoin is expected to rise significantly in the future.
However, in investing, it is often said that you “buy on rumors and sell on news.” Some believe that the approval of a Bitcoin ETF will be a “selling on news” event, leading to a price decline due to profit taking.
We don’t know how the Bitcoin price will move. However, there is no doubt that Bitcoin has entered a new stage.
｜Text: Takayuki Masuda