In a few days' time, a revolution in the world of finance could become a reality as fourteen American financial giants enter the Bitcoin ETF arena. These companies, which include Grayscale, BlackRock and Fidelity, are eagerly awaiting the SEC's decision to manage investment funds dedicated to Bitcoin. These requests, some of which have been made for years, mark a major shift in the perception of Bitcoin, once considered a "virtual currency" and a "scam". The final decision is expected between January 8 and 10, 2024.
First of all, what is an ETF? An ETF (Exchange Traded Fund) is an exchange-traded investment fund that tracks an index made up of different stocks, commodities or cryptocurrencies. ETFs are widely used in the traditional financial system and highly prized by institutional investors. There are currently no spot bitcoin ETFs in the United States. The first are awaiting approval from the US financial regulator, the SEC (Securities and Exchanges Commission).
ETFs would make investing in Bitcoin more accessible to institutional investors, who are still reluctant to invest in it and don't want to deal with all the technical complexity of buying and holding cryptos. Individual investors, attracted by Bitcoin, might be more inclined to invest via an ETF, as this would offer them greater assurance and reinforce their confidence in a financially regulated and accessible service. This transition would offer them a more familiar and secure route to participate in the cryptocurrency market, previously perceived as complex and risky.
Grayscale - $50 billion in funds under management
Ark/21Shares - $6.7 billion in funds under management
BlackRock - $9,000 billion (9 trillion) in funds under management
Bitwise - $1 billion in funds under management
VanEck - $76 billion in funds under management
WisdomTree - $94 billion in funds under management
Invesco/Galaxy - $1300 billion (1.3 trillion) in funds under management
Fidelity - $4,500 billion (4.5 trillion) under management
Valkyrie - $1,000 billion (1 trillion) in assets under management
Global X - $42 billion in assets under management
Hashdex - $563 million assets under management
Franklin Templeton - $1530 billion (1.53 trillion) funds under management
With funds under management amounting to nearly $20,000 billion, these companies could transform the Bitcoin market. Even a conservative 1% allocation of these funds to Bitcoin would inject $200 billion into the market, a potentially colossal move for the cryptocurrency.
Valkyrie revealed in its filing that it would charge a 0.80% management fee on the ETF, if the SEC approves the products early next year. Fidelity Wise Origin Bitcoin Fund is positioned as the cheapest, with fees of just 0.39%. Invesco announced fees of 0.59%, but added that it would waive these fees for six months on the new fund's first $5 billion in assets.
This wave of investment comes at a key moment, the year of Bitcoin's halving. The production of new BTC will be halved and, coupled with an algorithmic scarcity of supply, could trigger a historic explosion in demand for Bitcoin. It's time to prepare for this new age of Bitcoin.
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