Here's what a bitcoin ETF actually means for investors
KEY POINTS
The Securities and Exchange Commission approved the first-ever spot bitcoin ETFs on Wednesday, paving the way for them to begin trade.
The move will give investors increased ways to gain exposure to bitcoin, which they can now hold via existing financial instruments.
CNBC runs through what you need to know about the new bitcoin ETFs, and why they're a big deal for investors — and for the cryptocurrency itseThe U.S. Securities and Exchange Commission just approved the first-ever batch of spot bitcoin exchange-traded funds to come out of the U.S.
The agency gave the green light on Wednesday to sponsors of 10 ETFs, including BlackRock, Invesco, Fidelity, Grayscale, and Ark Invest — paving the way for these funds to begin trading as soon as this weeThe move was largely expected, even after a social media hacking snag. A false statement saying the regulator had approved a bitcoin ETF was published Tuesday on the SEC's social media account on X, formerly known as Twitter. The agency later clarified that its account had been compromised.
The actual approval Wednesday marked a massive step for the cryptocurrency, as it will give investors increased ways to gain exposure to the token — not just from holding it directly, but via existing financial instruments that trade on a regulated stock exchangBut what does that all mean exactly, and how does it affect investors? CNBC runs through everything you need to know about the bitcoin ETF milestone.What's a bitcoin ETF?
An ETF is an investment fund that tracks the performance of an underlying asset. That could be stocks, a basket of currencies, a precious metal like gold, or, in this case, bitcoin.
It's a way for investors to get exposure to the value of the underlying asset without directly owning it.
ETFs trade on traditional stock exchanges, and their value should rise when the underlying asset increases in price, or fall if it decreases.
As crypto investors look to assess what the market impact of a bitcoin ETF might be, many are comparing Wednesday's news to the greenlighting of the SPDR Gold Shares ETF — the first-ever spot gold ETF — in 2004.
The total gold market capitalization was worth around $1 trillion to $2 trillion before the gold ETF was approved, and this subsequently ballooned to $16 trillion in a few years after, according to Vijay Ayyar, vice president of international markets for Indian crypto exchange CoinDCX.
"Bitcoin's adoption will be much faster and bigger than that," Ayyar told CNBC via WhatsApp.
e.k.lf.
