The volatile world of cryptocurrency is blending with traditional finance through Bitcoin ETFs (Exchange-traded funds). This new investment option has created a buzz around the crypto landscape and has also had price effects.
Although ETFs have been present in the traditional investment space for a while, the first ETF for crypto was for Bitcoin in 2021, after ProShares’ application was granted.
While Bitcoin can be sold and traded on exchanges just like a stock through the futures market, the current agitation is for a spot Bitcoin ETF, which the United States Securities and Exchange Commission (SEC) has stonewalled since the first application was filed.
However, following BlackRock's filing, the SEC is currently dealing with a new wave of spot Bitcoin ETF applications from major investment firms.
The flurry of similar applications from rival asset managers was initiated by BlackRock’s filing after speculation that the asset manager might know something that could potentially lead to its application's approval.
Consequently, investment firms are queuing to trade America’s first spot-based Bitcoin ETF if their applications get approved.
In this post, we will explore what a Bitcoin ETF means, the asset managers that have applied for a spot Bitcoin ETF, and why.
What is a Bitcoin ETF?
Exchange-traded funds (ETFs) are securities that cover commodities, futures, stocks, bonds, or index funds and are traded on the stock exchange. ETFs trade the same as stocks, meaning they can be traded on margin and be shorted.
In light of the explanation above, Bitcoin ETFs give exposure to Bitcoin without the need to own the digital asset. The Bitcoin ETF allows the tracking of Bitcoin’s price through futures contracts on the stock exchange, thereby allowing both buy and sell options.
The first Bitcoin ETF was approved by the SEC in 2021 after much back and forth. ProShares’ Bitcoin ETF, under the ticker “BITO,” was the first and allows the tracking of Bitcoin’s futures market.
The exciting thing about Bitcoin ETFs is that they can be sold and traded on traditional stock exchanges rather than crypto trading platforms. It also opens up the crypto industry to mainstream investors.
After the first Bitcoin ETF in 2021, there have been other ETFs that hold Bitcoin Futures.
However, currently, the Bitcoin ETF only holds Bitcoin futures contracts and not spots. To date, the United States Securities and Exchange Commission has yet to approve a Bitcoin spot ETF as it continues to evaluate the possibility and risks that come with it.
Bitcoin spot ETF will allow direct exposure to Bitcoin, unlike futures, with potential market manipulation repeatedly cited by the SEC for its unapproval. With over 30 spot Bitcoin ETF applications rejected, asset managers haven’t been daunted in their quest for spot Bitcoin ETFs.
BlackRock, after its recent filing, set in motion a flurry of applications as other asset managers hope to trade America’s first spot Bitcoin ETF.
With over $9 trillion in assets under management, BlackRock is the world's largest asset manager. On June 15, BlackRock sent a shock wave through the crypto and trading industries as it filed an application for a Bitcoin spot ETF.
BlackRock’s filing lists Coinbase as the cryptocurrency custodian and data provider for the spot market and BNY Mellon as the cash custodian. BlackRock’s ETF filing has created a ripple effect in the crypto scene, including a price impact and a rush of applications from other asset managers.
BlackRock is filing its 33rd spot Bitcoin ETF application, which it believes has cleared all hurdles presented by the SEC.
Fidelity, the Wall Street giant, is on the verge of submitting its own application for a spot Bitcoin ETF after BlackRock’s.
Fidelity is an asset management giant managing over $11 trillion in assets and aims to join the spot Bitcoin ETF move initiated by BlackRock.
This will be Fideity’s second attempt at an application, with confidence heightened after BlackRock’s.
WisdomTree is another asset manager to file for a spot Bitcoin ETF after BlockRock’s filing, which it did on June 20.
The New York-based asset manager describes its proposed investment vehicle as the WisdomTree Bitcoin Trust, which would be listed on the Cboe BZX exchange under the ticker BTCW.
By filing for a spot Bitcoin ETF, WisdomTree intends to allow institutions and investors to gain exposure to Bitcoin’s value without directly investing in it.
Galaxy Digital and Invesco Joint Bitcoin ETF—Invesco Galaxy Bitcoin ETF
Invesco and Galaxy Digital made a fresh application to the SEC in June after BlackRock filed its own, called the Invesco Galaxy Bitcoin ETF.
Invesco and Galaxy Digital already filed a joint spot Bitcoin ETF in 2021, which was rejected by the SEC.
Invigorated by BlackRock, the Invesco Galaxy Bitcoin ETF has another chance at success, which will allow the duo to be one of the first to list a spot Bitcoin ETF on American markets.
This won’t be ARK Invest’s first rodeo, as it already applied for its first spot Bitcoin ETF in 2021 and is currently on its third application, filed in April.
ARK Invest, partnering with 21 Shares, refiled its spot Bitcoin ETF and hopes to be granted approval by the US SEC. They intend to give investors exposure to Bitcoin without holding the asset.
ARK Invest’s CEO, Cathie Woods, a Bitcoin enthusiast, sees the digital asset as a new asset class that could become reserve money. This contributes to the repeated filings for spot Bitcoin ETFs by the firm.
Valkyrie filed a new Bitcoin spot ETF application with the SEC in June after the filing frenzy started by BlackRock, under the name Valkyrie Bitcoin Fund.
Valkyrie aims to be one of the first to trade America’s spot Bitcoin ETF after its recent application with the SEC.
Prior to its recent application, Vallkyrie’s first filing for a Bitcoin ETF was in January 2021, and by early 2022, it managed to get a Bitcoin mining ETF approved by the SEC.
With pressure mounting on the SEC after a flurry of applications by investment firms, a convincing reason must be presented for the rejection of spot Bitcoin ETFs.
Bitcoin and the broader crypto market are already benefiting from this excitement, which will further soar after spot BTC ETF applications are granted.