How Bitcoin ETFs could shape the future of digital assets

Crypto Community Lauds Hoskinson's Absence from 'Most Influential' List

Bitcoin (BTCUSD) is a cryptocurrency created in 2009 by a person or group of people under the pseudonym Satoshi Nakamoto. Since then, the value of Bitcoin has multiplied several thousand times, establishing itself as one of the most popular financial instruments worldwide. However, despite its success, Bitcoin remains criticized by regulators and financial institutions. In recent years, Bitcoin has been entangled in several significant scandals related to fraud, money laundering, and illegal activities.

The cryptocurrency has its advantages and disadvantages. Advantages include decentralization, enhanced security, and low transaction fees. Disadvantages encompass the volatile exchange rate, the initial costs associated with setting up a wallet, and the learning curve for beginners.

One of the latest news related to Bitcoin is that it has become the object of attention from major financial institutions. Some have begun exploring the utilization of Bitcoin in their operations. For instance, JPMorgan Chase, one of the world’s largest banks, has expressed intentions to employ Bitcoin for transactions between their clients. This matter has been a topic of dispute for quite some time, but the information has finally been confirmed.

In June, the total trading volume on centralized cryptocurrency exchanges increased for the first time since March. According to the data, the indicator increased by 14.2%, reaching $2.71 trillion. Spot volume on centralized exchanges reached $575 billion, and the volume of derivatives trading amounted to $2.13 trillion. The current market cap of Bitcoin is $568 billion, representing Bitcoin dominance of more than 45%.

Analysts attribute this to increased market activity after the U.S. Securities and Exchange Commission (SEC) lawsuits against Coinbase and Binance. Another reason experts note is the mass filing of applications by companies to register a spot Bitcoin ETF. Against this background, the shares of Bitcoin firms show strong growth, and the volume of assets under management of the exchange-traded fund from ProShares reached $1.04 billion.

Also, BlackRock’s largest money manager has re-filed documents with US regulators through the Nasdaq exchange, adding new details to the proposal for an exchange-traded fund investing directly in Bitcoin, Bloomberg writes.

At the same time, the Coinbase crypto exchange will provide market surveillance in support of the new ETF of the world’s largest asset manager. The SEC found the initial documents needed the necessary information.

However, it is worth remembering that the total trading volume on cryptocurrency exchanges at the end of June 2023 dropped to a minimum since the fourth quarter of 2020.

Observing the cryptocurrency market can be the key to obtaining SEC approval for a spot Bitcoin ETF, as it can reduce the number of fraud cases and market manipulation, which were the main reasons for the rejection of 30 applications for Bitcoin ETFs. BlackRock applied for a spot Bitcoin ETF in mid-June and was followed by other firms amid market optimism that the SEC might change its long-held view that such a fund should not be allowed.

There are opinions that the position of the American regulator regarding spot Bitcoin exchange-traded funds (ETFs) is challenging to maintain, noting that the SEC has already allowed Bitcoin ETFs based on futures contracts and recently approved ETFs based on futures contracts with leverage.

The SEC would prefer to create a regulated Bitcoin ETF managed by more traditional Wall Street participants and controlled by existing regulated exchanges rather than dealing with an over-the-counter product filling an institutional gap. Now the market is waiting for the regulator’s final decision, which could be a turning point for the industry. Against the background of the ETF news, shares of crypto companies, including Coinbase, MicroStrategy, Riot Blockchain, and Marathon Digital Holdings, showed double-digit growth.

The approval of the instrument will finally bring the crypto market out of the bearish phase due to the influx of traditional investors and, as a result, an increase in liquidity. However, one should not hope for a sharp rise in quotations, experts say. The main advantage will still be a more stable regulatory environment in the digital assets sector.

The absence of spot ETFs based on the first cryptocurrency also leads to the growth of over-the-counter products, such as GBTC, which are expensive, low-liquid, and ineffective.

Thus, Bitcoin continues to attract attention and interest from investors, enthusiasts, significant financial institutions, and investment funds. In the future, we can expect even more news and events related to this cryptocurrency.

There has also been a recent increase in interest in Bitcoin from institutional investors. Some significant investment funds have started investing in this cryptocurrency. This may lead to a further rise in the price of Bitcoin and an increase in its popularity.

In addition, several major events related to cryptocurrencies were held, including the Bitcoin Conference in Miami and the Bitcoin Cash Conference in San Francisco. These events attracted a large number of participants and became a platform for discussing current trends and development of the cryptocurrency market.

Now Bitcoin is uncertain as regulators continue to tighten the rules for cryptocurrency exchanges and other participants in the cryptocurrency market, and some countries have already banned the use of Bitcoin for financial transactions.

Nevertheless, Bitcoin is still an attractive investment for those who believe in its potential and are willing to take risks. Despite all the problems associated with Bitcoin in the past, it continues to attract more and more attention and investment, which indicates its viability and potential.

Related Stories: