What happens if Bitcoin ETF is approved?

What happens if Bitcoin ETF is approved?

Time Stamp: January 5, 2024 10:05 AM
Source Node: 3047268

The crypto agenda is pretty busy nowadays; people are asking, “What happens if Bitcoin ETF is approved?” Let’s take a closer look at the answer that everyone is looking for!

Something big might be on the horizon: the spot Bitcoin Exchange-Traded Fund (ETF) approval by the Securities and Exchange Commission (SEC). This isn’t just about the ups and downs of the market; it’s about making it easier for everyone, from big investors to regular folks, to add Bitcoin to their investments without dealing with tricky crypto exchanges. What happens if Bitcoin ETF is approved?

What happens if Bitcoin ETF is approved?
What happens if Bitcoin ETF is approved? Here is a deeper look (Image Credit)

What happens if Bitcoin ETF is approved?

So, what happens if Bitcoin EFT is approved? According to Fool, if the SEC gives the green light to a spot Bitcoin ETF, it means a big change in how folks can get their hands on Bitcoin. You won’t need to mess around with crypto exchanges or brokers anymore. It won’t fix everything in the crypto world, but it does make buying Bitcoin easier for regular folks and the big guys who invest a lot of money. It’s like adding a new door to get into the Bitcoin party, and it might make things safer and simpler for everyone.

What is a Bitcoin ETF?

Simply put, an Exchange-Traded Fund (ETF) is like a mixed bag of investments that you can buy and sell on the stock market. It could include things like stocks, bonds, real estate, or commodities. Now, imagine a Bitcoin ETF – it’s like a special bag containing units of Bitcoin. This allows investors to get involved with Bitcoin through their regular brokerage accounts easily.

Big players like ARK Investment, BlackRock, and Grayscale Investments are trying hard to get approval for Bitcoin ETFs. In the past, the SEC said no to similar proposals due to concerns about fraud and market tricks, worrying that investors in the crypto world aren’t well-protected. But recently, a court said the SEC made a mistake, and the SEC didn’t argue against it.

Here’s the key difference: there’s another type of ETF called Bitcoin futures ETF, already approved by the SEC. With this one, you’re not actually owning Bitcoin; it’s more like making a bet on what Bitcoin’s future price might be. On the other hand, a spot Bitcoin ETF means you truly own Bitcoin, not just a contract speculating on its future price.

What happens if Bitcoin ETF is approved?
The crypto world has turned their attention, and they all ask, what happens if Bitcoin ETF is approved? (Image Credit)

How might the market react?

Now, here’s where it gets interesting. Bitcoin has been doing a victory dance, jumping up 61% since October because everyone thinks the SEC will say yes to the spot ETFs. But here’s the catch: experts are saying that once the ETFs get the official nod, the price of Bitcoin might dip a little.

Remember when CME introduced Bitcoin futures in 2017 or when Coinbase joined Nasdaq in 2021? Bitcoin was on a high before those events but took a nosedive afterward. Some smart folks are predicting a déjà vu moment with the spot ETFs. The idea is that people who made money on the Bitcoin surge might sell off once the ETFs are official to lock in their gains, says CoinDesk.

CryptoQuant, a group that watches crypto trends, is saying Bitcoin could drop to around $32,000 because folks might decide to cash in their profits. Another crypto trading firm, QCP Capital, is also whispering that the initial hype for the ETFs might be less than expected, setting the stage for a classic “sell-the-news” scenario.

Featured image credit: André François McKenzie/Unsplash

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