The finish line appears to be in sight for the approval of the first spot Bitcoin (BTC) exchange-traded fund in the U.S. as filers have put the finishing touches on their applications while exchanges have started to lay the groundwork for listing the ETFs once approved.
Letters filed by the Cboe BZX Exchange with the Securities and Exchange Commission (SEC) on Wednesday notified the regulator that it had approved the offerings from ARK 21Shares, Invesco Galaxy, Fidelity, VanEck, WisdomTree and Franklin Templeton. The letters were sent on the same day as the deadline for the SEC to rule on the ARK 21Shares application, prompting many to speculate that multiple approvals are imminent.
“In order to facilitate timely listing, the Exchange requests acceleration of registration of these securities under Rule 12d1-2 of the Securities Exchange Act of 1934, as amended,” the letter from the Cboe said.
Bloomberg Intelligence senior ETF analyst Eric Balchunas said the Cboe filings are the “last step [before] S-1 effectiveness,” while his colleague James Seyffart said, “This is essentially a request to list tomorrow. Was expecting this after close today. So this is early, but still expected. This is a very late step.”
For more insight into the pending approval, Kitco Crypto had a conversation with David Bailey, CMO of Azteco, a California-based firm that offers minute bitcoin portions through a voucher system.
“It is more than likely that a spot BTC ETF will be approved in a short matter of time,” Bailey said.
“We have already seen spot Bitcoin ETFs being approved in a number of other countries including Canada, which already has six spot Bitcoin ETFs with combined assets worth more than $2.7 billion, as well as Germany, Brazil, and Australia,” he said. “This has paved the way for U.S. regulators to follow suit.”
“ETF approval in the U.S. would definitely be positive overall for Bitcoin,” Bailey added. “It would send a strong message that Bitcoin isn’t going anywhere, effectively boosting consumer confidence in BTC overall.”
As for what an approval would mean for the crypto industry at large, Bailey suggested it would be significant. “Not only would it boost confidence and demystify Bitcoin amongst consumers, it would also help drive adoption. By approving a spot BTC ETF, crypto has the potential to become a widespread solution for everyday payments, international remittances, and personal savings,” he said.
“However, it’s important to remember that Bitcoin is very different from the broader ‘crypto industry,’” he added. “Bitcoin was originally designed for consumers to make electronic payments, whereas most altcoins seem to have little use beyond being a highly speculative asset. In terms of the broader crypto market of alternative coins, they interest a minority of people but likely won’t ever find mass market consumer adoption as a solution for everyday payments.”
On the topic of Bitcoin liquidity on exchanges, Bailey highlighted that exchanges “have struggled to maintain their reputation lately,” and said given this, “we can expect to see consumers opting to manage their Bitcoin with smartphone wallet apps like Bitkey and buy their Bitcoin in small amounts.”
After a spot BTC ETF is approved, Bailey said the focus will shift to “widespread consumer adoption.”
“Over one billion adults across the globe have a smartphone but no bank account, meaning they have an internet connection and can send messages to anyone, anywhere in the world, but can’t make online payments,” he said. “This is where Bitcoin comes in – it offers a solution for unbanked, under-banked, and cash-by-choice consumers.”
When it comes to predicting the price of BTC in the year after an ETF launch, Bailey said “Uncovering an accurate price prediction for BTC the year after an ETF launch really depends on how quickly and extensively it's adopted by mass-market consumers.”
“The long-term value and price stability of Bitcoin is rooted in how consumers are using Bitcoin as a solution for their everyday payments,” he said. “The more people use Bitcoin in their everyday lives – as opposed to just storing it – the more the demand will increase and price stability will improve.”
According to Anthony Rousseau, head of brokerage solutions at TradeStation, in the short term, all eyes will be focused “on the expected inflows within the first 24 to 48 hours.”
“Projections range from substantial to record-breaking, with some envisioning flows in the multiple billions – an unprecedented feat in the ETF realm,” Rousseau said in a note shared with Kitco Crypto. “To put this into perspective, the current day-one record for ETFs stands at approximately $2.1 billion. However, the appropriate comparison would be with BITO, which garnered $1 billion in just two days.”
“It's essential to exercise caution and consider that immediate flows may largely comprise early adopters, primarily retail investors,” he warned. “This could potentially entail recycled money, possibly falling short of the lofty expectations. It's worth noting that in the short term, we might be prone to overestimation. Matching BITO's first-week performance would indeed signify a significant success, especially given the current state of the market cycle.”
In the long term, Rousseau said there is a “risk of underestimating its implications for the Bitcoin market.”
“This ETF marks the inception of fresh capital flowing into the Bitcoin space – an essential catalyst for initiating and sustaining a new bull market,” he said, noting that assets under management by global financial institutions are estimated at more than $100 trillion.
“A portion of these funds are potentially poised for allocation to Bitcoin, a factor not yet fully reflected in current valuations,” he said. “It's crucial to recognize that institutions can follow due process and navigate regulatory hoops to incorporate Bitcoin into their investment strategies, a journey that could span several months.”
“This alignment of institutional inflows with the Bitcoin halving event in April positions the asset class for a promising year ahead,” Rousseau said. “Many experts anticipate the possibility of a six-figure Bitcoin valuation soon. This ETF launch signifies the arrival of a new breed of investors in the Bitcoin arena, transforming it from a niche asset to a mainstream portfolio component.”
“For those of us who have witnessed Bitcoin's evolution over the years, this phase may seem somewhat uneventful,” he concluded. “However, it represents a crucial transition from adolescence to adulthood for the asset class, marking a pivotal moment in its journey towards broader acceptance and maturity.”
