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In late June, a major news item buzzed throughout the crypto world: the CBOE had filed an application with the SEC to open the world’s first Bitcoin Exchange Traded Fund (ETF). Largely enthusiastic comments began pouring into the SEC website, with many focusing both on the potential benefits of a Bitcoin ETF as well as the importance of adapting to a constantly evolving marketplace.
While the SEC announced they will be postponing their decision until the end of September, I am very optimistic that the application will be accepted, especially given the agency’s earlier announcement that Bitcoin and ETFs are not securities, as well as its decision to ease rules surrounding low-risk ETFs. Like many in the cryptocurrency sector, I am very excited by the potential of Bitcoin ETFs on the horizon, as I truly believe it will be a game changer for the cryptocurrency space. Here are three reasons why.
Bitcoin Price Could Dramatically Increase
To understand how Bitcoin’s price could rise following the launch of a Bitcoin ETF, it’s helpful to look at the launch of a gold ETF as an example. In 2003, the price of gold dramatically increased following the launch of an ETF. “Since its launch, retail access to gold has skyrocketed as new investors more easily turn to the gold market as a portfolio diversifier and as a foundational asset…Today, the SDPR GoldShares ETF is one of the biggest ETFs in the market with over $35 billion under management,” JPMorgan said.
Given the massive growth trajectory following the launch gold ETFs, many crypto enthusiasts, including myself, believe that the same positive correlation could exist between Bitcoin prices and the launch of Bitcoin ETFs. In fact, JPMorgan has referred to a Bitcoin-based ETF as the “holy grail” for investors.
Furthermore, I believe that a Bitcoin ETF launch could drive a massive increase of institutional money to the crypto market. Between Goldman Sachs announcing the launch of its bitcoin trading platform, to JPMorgan launching a patent for blockchain-powered payments, we have already seen increased institutional adoption in the crypto space this year. However, I believe that a launch of a Bitcoin ETF would be precisely the initiative to catapult Bitcoin’s price — and the cryptocurrency space as a whole — to the next level.
Bitcoin and Other Cryptocurrencies Could Become Much More Accessible
Let’s face it: the ever-changing world of cryptocurrency is complicated even for those of us who work in the crypto space. For newcomers to the sector, it can be downright daunting. To buy and sell cryptocurrency now, investors need to deal with cryptocurrency exchanges, as well crypto wallets, both of which can be complex and confusing, and if chosen unwisely, can lead to security risks. In addition to all of this, investors face concerns regarding lack of insurance protection and crypto custodianship in the space.