On January 11, 2024, the U.S. Securities and Exchange Commission (SEC) approved the Bitcoin spot ETF by a 3-2 vote.
On January 11, 2009, Satoshi Nakamoto transferred 10 bitcoins to Hal Finney, an early developer of Bitcoin, making him the first person in the world to obtain Bitcoin through transactions. Subsequently, Finney posted a Running Bitcoin post on Twitter, marking the beginning of Bitcoin transactions.
15 years have passed, and the cryptocurrency market environment is very different from the past. No one will argue whether Bitcoin will be the next Dutch tulip, and the high volatility of Bitcoin has also changed. All these show that the cryptocurrency market is gradually maturing.
Although many people claimed that the approval of the Bitcoin ETF was a "sell the news" event, the price of Bitcoin once reached $49,000. The first batch of Bitcoin spot ETFs in the United States started strongly, with total trading volume on the first day of trading exceeding $4.6 billion.
Industry leaders BlackRock and Fidelity Investments, with trading volumes of $1 billion and $710 million respectively, accounted for the vast majority of early-stage and daily trading volume, especially in terms of new capital inflows.
Grayscale Bitcoin Trust, now converted to a spot ETF, led the way in terms of volume, at about $2.32 billion, but given its status as a conversion fund, it’s unclear how much of this volume represents new capital inflows.
Bloomberg ETF analysts said Grayscale’s GBTC was a notable exception, with much of the volume likely representing selling activity, in contrast to potential inflows of new capital from newly launched BlackRock and Fidelity funds.
Another Bloomberg ETF analyst, Athanasios Psarofagis, said that although most of the demand may come from "seed funds" pre-arranged by fund issuers, as more proprietary traders list Bitcoin funds on their platforms, more organic demand may emerge in the future, such as from retail investors or financial advisors.
Sources revealed that investment banking giant UBS will allow some clients to trade Bitcoin spot ETFs. The prerequisites for the transaction include that UBS cannot solicit transactions and accounts with low risk tolerance cannot participate in the transaction.
Fox Business reporter Eleanor Terrett tweeted that Merrill Lynch does not currently support Bitcoin spot ETF trading. But according to sources, Merrill Lynch is waiting to see whether ETF trading is effective before deciding whether to change its internal policy that currently does not allow such products.
Standard Chartered predicts that these ETFs could bring $50 billion to $100 billion in revenue to Bitcoin by 2024. The bank said these new inflows, combined with the halving, could push Bitcoin to $200,000 by the end of 2025.
Some Bitcoin investors worry that as more ETF issuers enter the market, real Bitcoin may become increasingly concentrated in the hands of institutions, which could weaken Bitcoin's decentralized properties.
However, some people also say that the decentralized nature of Bitcoin comes from its working mechanism. No matter who holds these Bitcoins, it is the miners who pack these transaction records and put them on the chain in a decentralized way. It is precisely because of the decentralized and censorship-resistant characteristics of Bitcoin that countries have always maintained a cautious attitude in supervision, which has hindered the global development of Bitcoin.
In addition to concerns about Bitcoin's liquidity and the possibility of manipulation, regulators also believe that Bitcoin's volatility may be too intensive and drastic for ordinary investors. For example, Bitcoin rose 60% in 2021, fell 64% in 2022, and then doubled in price in 2023.
The SEC questioned whether the fund had the information it needed to fully determine the value of Bitcoin. In 2021, SEC Chairman Gensler testified before the Senate Banking Committee that the crypto market lacked regulation and tracking, "raising concerns about possible fraud and manipulation." Gensler's post on the X platform on Tuesday still emphasized that crypto assets have "serious risks." In order to ease the SEC's concerns, ETF issuers such as BlackRock proposed the so-called shared tracking agreement, which may be the main reason why the SEC let down its guard.
Summarize
In general, the approval of the Bitcoin spot ETF is an important milestone in the cryptocurrency market, indicating that the market is moving towards a more mature and standardized direction. The Bitcoin spot ETF's single-day trading volume of over 4 billion is undoubtedly a historic record. Whether the spot ETF can continue to bring incremental funds to the market in the future and who will take over the Bitcoin ETF narrative are both worthy of our continued attention.
