What is a bitcoin ETF
Last month, the price of bitcoin surpassed $30 000 for the first time in a long time. The first cryptocurrency owes part of that momentum to an important event in the U.S. investment market. BlackRock has applied to launch iShares Bitcoin Trust, a spot bitcoin ETF. Its example was followed by other large firms and in just a few days in June, the SEC received five similar filings.
An ETF (exchange traded fund) is an exchange-traded fund whose shares can be purchased on traditional exchanges. These funds are available to retail investors and allow you to diversify your portfolio by holding stakes in a large number of companies.
Bitcoin futures exchange-traded funds are traded from 2021 on exchanges in the US, Australia and Canada. However, the difference between them and the spot ETFs that BlackRock and other firms are trying to launch is that they buy bitcoin commodity futures rather than BTC. Meanwhile, the launch of a spot bitcoin-ETF involves the fund buying the cryptocurrency directly. Accordingly, the price of the fund’s shares will be linked to the price of bitcoin, and the fund’s custodians will be required to ensure that BTC is held in accordance with the number of shares issued.
This is far from the first time applications to launch spot bitcoin ETFs have been submitted. Back in 2013, the Winklevoss brothers tried to launch a similar fund and were turned down. Since then, many companies have followed in their footsteps: in all, about 30 applications to launch a bitcoin-ETF were submitted before this year and all were rejected by regulators.
The latest applications were the first since 2021 and so far none have been approved by the SEC. BlackRock’s and Fidelity’s applications were returned for revision before being updated and resubmitted to the regulator.
What’s going to happen to the crypto market
Although applications to launch exchange-traded funds have pushed bitcoin higher, community opinion is divided on the prospect of a bitcoin-ETF launching. Skeptics point out that while retail investors will invest in the fund, the fund will own and manage a large amount of BTC at will, which could set the stage for market manipulation;
Positive community members highlight the following pros of launching a bitcoin-ETF:
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Growth of crypto market capitalization. According to a Bloomberg analyst, if the SEC approves BlackRock’s application, up to $30 trillion could be invested in bitcoin. In addition, if there is a lot of interest in bitcoin ETFs, the funds will have to buy more BTC to issue more shares, this will provide a constant flow of capital into the crypto market.
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Massive proliferation of BTC. ETFs are one of the most popular investment instruments in the world. The launch of the bitcoin-ETF will open the door to investing in the first cryptocurrency for a huge number of investors who previously couldn’t or didn’t want to deal with the process of buying bitcoin.
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Integration with the traditional financial marketplace. Once it hits traditional markets, cryptocurrency will no longer be the domain of only tech-savvy users and young people.
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BTC price growth. The launch of a spot ETF could give another boost to the BTC price. In addition, if the demand for the funds is high and the volume of bitcoins in them grows, it will also favorably affect the price of the first cryptocurrency.
Preparing to sell BTC
Although the U.S. regulator has 240 days to review each application, it’s never too early to prepare for a potential BTC price hike. Bitcoins are best stored in a personal crypto wallet rather than on an exchange, both for security reasons and to avoid facing withdrawal problems during a frenzy or period of high volatility.
In addition, it is better to clear the BTC stored on the wallet in advance, for example, with Mixer.money. When using the full anonymity mode after mixing, the user receives pure coins from exchanges with a turnover of more than 1 000 000 BTC a day. Such bitcoins are not tracked by analytics software as having passed the mixer and can be traded freely on exchanges with KYC without risk of account blocking.
You can use the mixer on the website, using the TOR-mirror, as well as through the official Mixer.money bot in Telegram. Coin clearing takes up to six hours, and the service’s maximum commission is up to 5% via the website and up to 4.5% via bot + 0.0007 BTC.
Although U.S. regulators have gone on the warpath against cryptocurrencies and recognized some of them as securities, so far there have never been any claims against bitcoin. This is encouraging for crypto investors, as major global investment firms have applied to launch ETFs, and many believe that the likelihood of bitcoin exchange-traded funds launching is very high.