Investors in the U.S. are eagerly awaiting approval for the first spot bitcoin exchange-traded fund (ETF), which has the potential to be a game changer for cryptocurrency investors. The price of bitcoin has surged in 2023 as anticipation for the ETF approval grows, with the digital currency topping $44,000 for the first time since April 2022, and year-to-date gains above 160% as of Dec. 21, largely driven by hopes for a spot bitcoin ETF.
Discussions between the Securities and Exchange Commission (SEC) and asset managers with pending spot bitcoin ETF applications have progressed to technical details, suggesting that approval may be on the horizon. Over a dozen firms, including BlackRock, WisdomTree, and Valkyrie, are eagerly awaiting the green light from the SEC, which experts believe could come as early as January.
If approved, the spot bitcoin ETF would provide a direct investment in the digital asset, providing a more accessible and potentially less risky option for investors compared to the current bitcoin futures ETFs, which own bitcoin futures contracts. Bryan Armour, director of passive strategies research for North America at Morningstar, stated, “For ETF investors, this would be the best product on the market,” highlighting the potential significance of the approval.
While many anticipate a bitcoin rally upon approval, experts caution that the asset remains “extremely volatile and speculative,” urging investors to consider their risk tolerance and goals before investing. Financial advisors have shown interest in investing in crypto, with 72% stating they would be more likely to invest if spot ETFs were approved in the U.S., according to a 2022 Nasdaq survey.
Overall, a spot bitcoin ETF approval could mark a significant milestone for cryptocurrency investors, offering them a more direct and potentially less risky way to invest in the digital asset. However, it is important for investors to carefully consider their risk tolerance and the volatile nature of cryptocurrencies before jumping in.
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