SEC Approval: A Game Changer for Cryptocurrency Investment
The US Securities and Exchange Commission (SEC) has approved exchange-traded funds (ETFs) that track the price of bitcoin, in a huge moment for the world’s largest cryptocurrency. What does this mean for bitcoin and the cryptocurrency industry?
A bitcoin ETF allows investors to gain exposure to the price of bitcoin without having to own bitcoin directly, avoiding many of the complications and risks. These include having to deal with crypto exchanges, some of which have poor cyber security records. The bitcoin is held on behalf of the investor by the registered custodian. This opens the market to many new investors and potentially moves it towards mainstream investors. Some analysts are predicting that the ETFs could bring $50 billion worth of investment this year alone.
These new spot bitcoin ETFs differ from the existing bitcoin futures ETFs in that they track the price movements precisely, compared to the futures ETFs which track agreements to buy or sell bitcoin at a pre-agreed price. This means that it invests directly in bitcoin as the underlying asset, not derivatives contracts.
The price of bitcoin initially fell, as investors cashed in on short term winnings, however bitcoin mining shares rose, indicating a longer-term confidence of investors. Iris Energy and CleanSpark were up 8%, Marathon Digital was up 6%, and Coinbase saw a 5% increase in share price.
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