The US Securities and Exchange Commission (SEC) has eight days to approve all 12 pending spot Bitcoin exchange-traded fund (ETF) applications but you must be wondering what an ETF is and why its anticipated approval is surging the price of the scarce digital asset.
This is because the comment period for 9 of the 12 applications ends on November 17.
The SEC has already extended the deadline for a number of the pending spot Bitcoin ETF filings, and selected November 8 as the last day of the comment period.
From November 17, the comment period for 3 filings, including Global X Bitcoin Trust, Hashdex Bitcoin ETF, and Franklin Bitcoin ETF, would recommence.
This means that they wouldn’t be approved or denied until after November 23 at the earliest.
While the window for accepting all 12 filings ends on November 17, the SEC could technically make a decision on 9 of the 12 applications anytime before January 10.
Bloomberg ETF analysts James Seyffart and Eric Balchunas predict a 90% chance of an approval sometime before January 10 next year.
New Research note from me today. We still believe 90% chance by Jan 10 for spot #Bitcoin ETF approvals. But if it comes earlier we are entering a window where a wave of approval orders for all the current applicants *COULD* occur pic.twitter.com/u6dBva1ytD
— James Seyffart (@JSeyff) November 8, 2023
While the approval of a spot Bitcoin ETF is in no way guaranteed, the market is optimistic about the possibility with the price of Bitcoin gaining more than 30% in the last 3 months.
What is Bitcoin ETF?
A Bitcoin ETF is a type of investment fund that allows you to buy and sell Bitcoin shares on a stock exchange, just like you would buy and sell shares of Apple or Google.
This makes it easier for people to invest in Bitcoin even if they don't know how to buy and hold Bitcoin directly.
Bitcoin ETFs track the price of the asset. So, if you buy shares in a Bitcoin ETF, it means that you will profit if the price of the asset goes up and lose money if it goes down.
Bitcoin ETFs are a relatively new investment product but they have become increasingly popular in recent months. This is because they offer a number of advantages over investing in Bitcoin directly, such as:
- They are more accessible to investors.
- They are more liquid.
- They are regulated by the SEC.
Why pending ETFs are so important?
BlackRock, Grayscale, and other pending spot Bitcoin ETFs are critical for approval because they would make it easier for institutional investors to invest in Bitcoin.
This would likely lead to a significant increase in demand for Bitcoin which would push the price higher.
Many institutional investors are hesitant to invest in Bitcoin directly because it is a new and volatile asset. A spot Bitcoin ETF would allow institutional investors to invest in Bitcoin in a more familiar and regulated way.
For a perspective
Grayscale is the world's largest digital currency asset manager, with over $40 billion in assets under management (AUM). BlackRock is the world's largest asset manager, with over $10 trillion in AUM.
A recent survey by Fidelity Digital Assets found that 73% of institutional investors are interested in investing in Bitcoin.
If just 10% of institutional investors were to allocate 1% of their portfolios to Bitcoin, it would represent a $280 billion investment.
If BlackRock launches a Bitcoin ETF, it is estimated that it could attract $20 billion in assets within the first year.
Grayscale has already filed to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. If this is approved, it would be the first spot Bitcoin ETF in the US.
According to some analysts, if all 12 pending spot Bitcoin ETFs are approved, it could lead to a $1 trillion increase in the market capitalization of Bitcoin.
