NAVIGATING THE NOW: EVENTS LEADING UP TO THE BITCOIN ETFS
A breakdown and analysis of the road leading up to the ETF approvals this year, and what the implications going forward.
In recent months, Bitcoin ETFs have been at the forefront of discussions within the cryptocurrency, finance, and investment communities. Numerous articles have been dedicated to the latest surge of applications for spot Bitcoin ETFs, capturing widespread attention. Stakeholders have been actively speculating on the potential implications of these developments. After much anticipation, the United States Securities and Exchange Commission (US SEC) finally approved these new securities at the beginning of 2024. With financial giants such as BlackRock, Fidelity, Valkyrie, ArkInvest, VanEck, Wisdom Tree, Bitwise, Invesco Galaxy, and others entering the arena, they are leading the charge into a new era of Bitcoin investments.
The path towards Bitcoin ETFs and their recent authorizations has been marked by considerable obstacles. Advocates for long-term Bitcoin ETFs have encountered numerous challenges over the past decade. Now, as Bitcoin enters its 15th year, we reflect on its remarkable evolution from an experimental niche currency to a formally recognized asset backed by some of the world's most prominent asset managers. How did the world's first decentralized asset, originally designed to reduce reliance on central authorities, transform into the most anticipated investment development of early 2024? What series of events have contributed to the current unprecedented surge of institutional interest? And what factors influenced the US SEC's decision-making process, leading to the approval of the latest wave of spot ETF applications?
Bitcoin ETFs offer the potential to link the experimental and predominantly decentralized realm of cryptocurrencies with conventional financial frameworks. They represent an unprecedented fusion of technological advancement and regulatory compliance, poised to revolutionize perceptions and investment strategies concerning digital assets. These ETFs not only introduce novel investment avenues but also serve as transformative agents within US financial
markets and beyond.
SPOT BITCOIN ETFS:
A SUPERIOR APPROACH TO CRYPTO INVESTING?
Exchange-traded funds, commonly known as ETFs, constitute a colossal $7.7 trillion industry, underscoring their status as one of the most esteemed and recognizable investment vehicles worldwide. With a three-decade history, ETFs have become deeply entrenched within Wall Street, embodying a fundamental component of investment strategies.
ETFs were originally crafted to facilitate the trading of more intricate financial instruments, akin to purchasing and selling company stocks. In the past decade, advocates and entrepreneurs within the Bitcoin community have endeavored to promote the concept of a Bitcoin-related ETF, aiming to streamline and formalize investments in the digital currency. Prior to the recent approvals, no one had succeeded in this endeavor, except for Bitcoin futures ETFs—ETFs based on derivatives linked to Bitcoin but not directly on the cryptocurrency itself. After years of unsuccessful attempts, initiatives to introduce spot Bitcoin ETFs had seemingly lost momentum. However, in the past year or so, discussions within the market regarding potential new Bitcoin ETFs regained momentum. Financial publications began reporting on additional spot Bitcoin ETF applications, prominently featuring the involvement of trillion-dollar asset management firms such as BlackRock and Fidelity. These filings hinted at the possibility of heightened institutional interest in Bitcoin.
To be continued
