Spot Bitcoin ETFs have finally been approved in the US after a difficult decade of trying. Next step: get into trading Thursday morning.
Following the go-ahead from the Securities and Exchange Commission on Wednesday afternoon, the highly anticipated products will make their debut on U.S. markets run by the New York Stock Exchange, Cboe Global Markets and Nasdaq, with the help of major trading firms planning to provide liquidity.
Buying and selling can technically start as early as 4am ET (09:00 UTC) as that is the time US stock exchanges open – not at the popular daily opening ceremonies that take place 5 and a half hours later.
The products will allow almost any retail customer to learn about the price of Bitcoin (BTC) using their traditional brokerage apps and accounts, as well as allowing traditional financial institutions to invest without having to go through cryptocurrency exchanges.
These ETFs give investors interested in digital assets more options, said Cynthia Le Bissette, head of digital asset management at Fidelity, one of the issuers of Bitcoin ETFs. The latest products differ from those approved in 2021 in the US, namely Bitcoin futures ETFs, which invest in derivatives, not in the digital assets themselves.
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“We have long believed that a spot-priced exchange-traded product would be an effective way for investors to gain exposure to bitcoin,” she said. “As a company, we remain committed to meeting the growing demand from investors by providing them with tools that support their choices and facilitate secure access to markets.”
Likewise, a Cboe Global Markets spokesperson said ETFs would give investors a “transparent and regulated” way to track the price of bitcoin. “The approval represents a major step forward in establishing cryptocurrencies as a tradable asset class, paving the way for new trading opportunities.”
With 11 Bitcoin ETFs on offer — some of which have already amassed billions of dollars in assets ahead of launch — liquidity providers and market makers have spent the past months preparing for this day, ensuring that the Bitcoin market is — and here to stay. – Effective with the new wave of interest coming on Thursday.
The bitcoin spot market, bitcoin futures markets and bitcoin futures ETFs will all help with day-one liquidity of spot ETFs, said Douglas Yunus, head of exchange-traded products at the New York Stock Exchange. The NYSE also has a number of liquidity programs, he said.
“For the market makers that are out there — and we have dozens of market makers who provide liquidity to our ETFs that will step in — they had natural hedges available to them,” he said. “We have a very nice price discovery process that will take place on the NYSE overnight until the open, so we expect a very dynamic and liquid market tomorrow.”
Robert Mitchnik, head of digital assets at BlackRock, told CoinDesk in an interview that the asset manager will use its partnership with Coinbase. The company integrated Coinbase Prime with its portfolio management tool, Aladdin, in 2021. While he didn’t talk about how big BlackRock is lining up in terms of assets under management when launching its Bitcoin ETF, he noted that the company has already unveiled a seed investment Worth $100,000.
“As is the case with the public, there was an initial investment in the ETF made by BlackRock,” he said. “One of the things that’s really important to understand is that we look at this as a long process.”
David Mann, head of ETF and capital markets products at Franklin Templeton, told CoinDesk in an interview that it was difficult to predict what inflows might look like in the first few days. While he expects “a lot of excitement” on the first day, he said there may be a more gradual increase in interest and investment than people appreciate.
“It wouldn’t shock me if widespread ETF users who are now looking to get some exposure to bitcoin within an ETF vehicle would go through the normal review process to make sure they’re comfortable with the ETF, and that often takes time,” he said.
He said there may be a “break out of the gate,” but it could take weeks or months for investors to become comfortable with the Bitcoin ETF and verify that it behaves in a way they want to invest money in.
BlackRock’s Mitnick echoed that point, saying it will be a “long ride” after the launch for investors. He pointed to wealth advisors as an example, saying they could be part of an ETF’s larger investment channel. Since they have not yet had much exposure to investment vehicles containing Bitcoin, there will be a “learning journey” before they can allocate funds.
“There will be conversations about fit between advisors and clients,” he said. “It’s not something that’s going to happen right out of the gate, and the same goes for institutional investors who don’t yet have viable exposure solutions.”