The rumor mill had been churning for a long time. Now the decision has been made: The Bitcoin ETF has been officially approved. These effects are to be expected.
There has been heated debate for months about whether or not the Bitcoin ETF would be approved by the American Securities and Exchange Commission (SEC). The decision has now been made: the Bitcoin ETF is coming. The decision allows listed funds in the US that invest directly in Bitcoin (Bitcoin spot ETFs). Applications from investment heavyweights Blackrock and Fidelity were approved, among others.
“The approval of the Bitcoin spot ETF is a break in the dam in a positive way,” says Eric Demuth from the Bitpanda securities exchange. “The approval of a Bitcoin ETF will further encourage mass adoption of crypto assets by institutional investors. This is the next step into mainstream finance. Crypto is here to stay.”
At the same time, SEC boss Gary Gensler emphasized that the approval does not mean support from the regulatory authority for Bitcoin. The SEC repeatedly warns US investors about the risks of crypto investments, such as the enormous price fluctuations.
What are the implications of a Bitcoin spot ETF?
Without a doubt, the approval of a spot ETF for Bitcoin is a positive signal for the markets. Very important: a product like this encourages the inflow of funds from the institutional sector. An ETF allows investors to invest indirectly in cryptocurrencies, which was previously not possible if they were afraid of the risk of buying digital coins such as Bitcoin, Ethereum, Solana or Cardano and Co.
This is how a Bitcoin spot ETF works
So far, buyers and sellers trade cryptocurrencies on decentralized, unregulated exchanges such as Binance or Coinbase. You need a wallet to store the digital coins. Securities such as ETFs are traded on exchanges regulated by financial regulators. A Bitcoin ETF represents a kind of bridge between the two ecosystems. The asset of a Bitcoin ETF is the cryptocurrency Bitcoin. Investors can use ETFs to participate in the performance of Bitcoin without investing directly in the digital currency.
For star investor Cathie Wood, a Bitcoin spot ETF is ideal. The US investor has long been known as a fan of cryptocurrencies. Your company ARK Invest wants to launch its own crypto ETF. The approval now gives the plans tailwind. The US asset manager Grayscale had also applied for an Ether spot ETF, the decision of which was postponed until May because the stock exchange regulator needed more time to examine it than hoped.
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How do the prices react?
As expected, the prices of Bitcoin and Co. did not jump straight up after the decision. Experts assume that the courses have most likely already priced in admission.
“Much of the expectation that the ETF will be approved is already priced in, and it is likely that we will see a sell-the-news event after a brief bounce,” Demuth said.
A further rise to new records seems limited, and a major setback is likely. Investors saw what an initial sell-off could look like a week ago on Wednesday, when cryptocurrencies collapsed by twelve percent in a flash crash.
A false report also sent the crypto industry into turmoil. Hackers wrote on the US Securities and Exchange Commission website on January 9th that exchange-traded Bitcoin ETFs were approved. A little later, a spokesman for the authority made it clear that the report was incorrect. However, platform X (formerly Twitter) had previously taken over and spread the false report. The crypto price then jumped to $48,000 before falling to below $45,000 after clarification.
Cathie Wood also expects prices to fall sharply. Those who are selling are those who got in before the rally, speculated on a positive decision and made good profits, Wood explained in an interview with Yahoo Finance. However, the founder of the American investment company ARK Invest also expects the Bitcoin price to rise to a mark of 100,000 US dollars.
What this means for German investors
Investors in Germany cannot currently invest in a Bitcoin spot ETF. The reason for this is the legal framework provided by the applicable UCITS guidelines. The European Union guidelines stipulate, among other things, that an ETF must contain at least five different values. A pure Bitcoin spot ETF would be a single value fund and is therefore not permitted.
Most US ETFs usually only receive marketing authorization in the EU later. This has both regulatory and tax reasons. A lot also depends on a potential issuer like BlackRock and the respective trading venues.
Many US ETFs are also set up in an EU country such as Ireland and could therefore theoretically receive marketing approval. Most brokers and trading venues only offer EU-based ETFs. German crypto fans and investors who hold digital currencies could initially only benefit from the approval of spot ETFs through rising Bitcoin prices.