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News/Big Bitcoin ETF Moves You Missed: BlackRock Pivots, Market Heats Up

Big Bitcoin ETF Moves You Missed: BlackRock Pivots, Market Heats Up

Van Thanh Le

Dec 22 2023

4 months ago4 minutes read
Cute chibi cubic-styled humanoid robot in green and red, with a bright yellow and orange background, symbolizing the dynamic nature of bitcoin etf

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BlackRock's Strategic Moves in the Bitcoin ETF Space

BlackRock Maneuvers in the Bitcoin ETF Arena

BlackRock, the world's largest asset manager, has made a strategic pivot in its pursuit of a spot bitcoin exchange-traded fund (ETF). In a revised proposal filed with the Securities and Exchange Commission (SEC), BlackRock has embraced a cash creation and redemption mechanism, aligning with the regulator's apparent preference.

This marks a shift from the in-kind redemption model initially proposed for the iShares Blockchain and Tech ETF last month. The earlier model, which would have allowed investors to redeem shares directly for bitcoin held by the ETF, raised concerns at the SEC regarding potential investor protection and market manipulation risks.

By opting for cash redemptions, BlackRock has adopted a strategy already embraced by other firms aiming to bring a bitcoin ETF to market. ARK 21Shares, VanEck, and Hashdex have all recently amended their proposals to include cash redemptions as a concession to the SEC's apparent stance.

This trend aligns with the regulator's recent delays in issuing decisions on several other bitcoin ETF applications. Grayscale, ARK 21Shares, VanEck, and Hashdex are among those still awaiting the SEC's green light.

Interestingly, WisdomTree's latest filing presents a contrasting approach. Unlike the industry-wide shift towards cash redemptions, WisdomTree's proposal retains the possibility of both in-kind creation and redemption, potentially opening the door for future regulatory acceptance of this model.

Shifting Tides: Reactions and Implications

BlackRock's revised ETF proposal sparked diverse reactions within the industry. Bloomberg's senior ETF analyst, Eric Balchunas, saw it as a potential turning point, hinting that the cash-only model could finally resolve the long-standing debate over redemption mechanisms.

This aligns with the SEC's recent stance, with the regulator seemingly favoring cash redemptions for the time being. While this simplifies the process for investors, it does introduce tax implications due to the nature of cash transactions. Both issuers and participants will need to consider these implications as the landscape evolves.

The industry is watching closely to see if BlackRock's move becomes a domino effect, influencing other firms to adjust their proposals. If so, it could pave the way for the SEC's approval of the first spot bitcoin ETF, marking a significant moment for the cryptocurrency market.

However, the tax factor adds another layer of complexity, and it's uncertain how it will impact investor appetite and the long-term viability of cash-based models. Only time will tell if this is a temporary workaround or a permanent shift in the industry's trajectory.

IBIT Takes Center Stage: Market Reacts to BlackRock's Move

In another step towards a potential bitcoin ETF debut, BlackRock has assigned an official ticker: IBIT. This revelation came alongside their updated S-1 filing with the SEC, further outlining the fund's structure and operations.

While the filing confirms a cash creation and redemption mechanism, it also leaves the door open for an in-kind process in the future, subject to regulatory approval. This dual approach reflects the ongoing debate over redemption models and hints at BlackRock's willingness to adapt to the SEC's evolving stance.

chart.webp

The market has responded positively to these developments. Bitcoin's price climbed by over 3% on the news, showcasing renewed optimism surrounding the potential launch of a BlackRock-backed ETF. This could be a sign of increased investor confidence in the possibility of broader access to spot bitcoin through traditional financial channels.

The IBIT ticker now stands as a tangible symbol of BlackRock's foray into the bitcoin ETF space. Whether it ultimately leads to a first-mover advantage or sparks further regulatory discussions remains to be seen. 

The Bitcoin ETF Landscape Expands: New Entrants and Shifting Strategies

7RCC, a crypto asset manager, throws its hat in the ring with a unique offering: a spot bitcoin ETF combined with carbon credits futures. This innovative approach aims to track the Vinter Bitcoin BTC +4.64% Carbon Credits Index, with 80% of the portfolio in bitcoin and 20% in carbon credits futures. Joining forces with Gemini as custodian, 7RCC blends the allure of bitcoin with the growing interest in ESG-focused investments.

The race for bitcoin ETFs intensifies with 7RCC joining established players like BlackRock, WisdomTree, Ark Invest, and 21Shares. Notably, BlackRock recently updated its filing with a ticker symbol (IBIT), reflecting progress in their own application.

7RCC's strategic timing is interesting. Founded in 2021, they waited for the infrastructure to mature before entering the race, highlighting the cautious approach some players are taking. Notably, their bitcoin custody will be handled by Gemini, showcasing increased involvement from established financial institutions.

Abstract financial landscape in gold, silver, and blue, inspired by the influence of Blackrock in the market.webp

Meanwhile, Ark Invest further refines its strategy with an amendment to their ARK 21Shares Bitcoin ETF (ARKB). Opting for a cash-only model for share redemption and creation, Ark aligns with the SEC's current preference and seemingly anticipates regulatory approval by January 10th, based on inferences from SEC Chair Gary Gensler's statements.

However, Ark's lack of announced bitcoin purchases so far leaves questions about their procurement process and market readiness. Establishing a liquidity pool and market-making capabilities are crucial for a successful listing, yet specifics remain under wraps. Initial volume expectations are likely modest, with comparisons drawn to CME futures and the BITO Bitcoin futures ETF.

The appeal of an Ark bitcoin ETF extends to both retail and institutional investors, though current market sentiment among retail investors is comparatively subdued. 

The Hype-athon Begins: Marketing Maneuvers and Grayscale's Uncertain Fate

While the SEC ponders the fate of spot bitcoin ETFs, a new battleground emerges: the marketing war. Grayscale, the dominant player holding over $26 billion in assets, faces potential approval delays due to concerns about its market influence. Analysts like Eric Balchunas predict Grayscale's ETF may trail behind, while others like James Seyffart raise the possibility of a simultaneous launch.

Meanwhile, Bitwise takes a proactive approach, amplifying its marketing campaign with the iconic Jonathan Goldsmith, famous for his Dos Equis commercials. Their "Bitcoin is Interesting" campaign targets audiences across television, digital, and social media on major channels like CNBC, Bloomberg, and Fox Business Network. This move anticipates an industry-wide marketing blitz once the SEC gives the green light.

Market competition for investor attention is set to be fierce. Matt Hougan of Bitwise predicts a potential $55 billion in net flows within the first five years of a U.S. spot bitcoin ETF launch. With such lucrative possibilities at stake, expect creative campaigns and aggressive tactics from various firms vying for a slice of the pie.

Emerging Trends and Predictions in the Cryptocurrency Market

Energetic market scene depicting the diverse and dynamic world of ETF applications.webp

Spot Bitcoin ETFs: A Game Changer for Crypto Exchanges

The potential arrival of a spot Bitcoin ETF in the US is poised to shake up the cryptocurrency landscape, particularly for centralized exchanges. With traditional investors gaining easier access to Bitcoin through ETFs, trading dynamics could shift significantly. This influx of new capital could challenge existing exchange models and demand greater adaptability from the market.

The spot Bitcoin ETF approval for January seems "highly probable," as per updated applications indicating a cash-creation arrangement before the Jan. 10 deadline. K33 Research suggests that while cash creation may not be optimal, these updates signal a likely ETF approval in the coming three weeks, according to analysts Vetle Lunde and Anders Helseth.  

Bitcoin's Bullish Trajectory: Predictions of a Surge to $200,000

Optimism abounds for Bitcoin's future, with prominent figures like Dan Tapiero, Managing Partner at 10T Holdings, predicting a surge to $200,000 by May 2024. This ambitious forecast hinges on an expected surge in Bitcoin liquidity, fueled by factors like the potential approval of Bitcoin ETFs and the emergence of institutional-grade trading platforms. 

The GMI total liquidity index further bolsters this prediction, reflecting a growing appetite for Bitcoin among institutional investors. Traditional fund managers who disregard this trend do so at their own peril, as Bitcoin's potential for future growth cannot be ignored.

SEC's Evolving Stance on Ethereum

While the spotlight shines brightly on Bitcoin, Ethereum's future also holds fascinating possibilities. Bloomberg analyst James Seyffart suggests a potential shift in the SEC's stance towards Ethereum, with its recent approval of Ethereum futures ETFs hinting at a subtle acknowledgment of its status as a commodity. However, a reversal of this stance could trigger significant market disruptions, including the delisting of Ethereum futures contracts and ETFs. 

Despite the uncertainty, Seyffart remains optimistic, estimating a high likelihood of Ethereum being classified as a commodity by 2024. Chairman Gensler's relative silence on the matter may further indicate a move away from treating Ethereum as a security.

BlackRock, Nasdaq, and the SEC: Inches Closer to Bitcoin ETF Reality?

The winds of change are swirling around the world of Bitcoin, and at the center of the storm are BlackRock, Nasdaq, and the ever-cautious SEC. In a recent closed-door meeting, these heavyweights huddled to dissect the intricate puzzle of a potential Bitcoin exchange-traded fund (ETF) – a move that could unleash a tidal wave of interest in the nascent crypto market.

Memorandum about the meeting.jpg
Memorandum about the meeting. Source: SEC

Nasdaq, the iconic stock exchange, laid the groundwork by proposing a rule change under Nasdaq Rule 5711(d). This rulebook, essentially the gatekeeper for listing Commodity-Based Trust Shares, outlines the stringent criteria and regulatory hoops an ETF must jump through to secure its Nasdaq residency. Market integrity and investor protection are paramount, and the SEC, ever vigilant, wants to ensure no funny business goes down in the crypto realm.

Industry experts are already buzzing with anticipation. Michael Saylor, the tech entrepreneur and Bitcoin evangelist, even went so far as to suggest on Bloomberg TV that a Bitcoin ETF could trigger a "significant bull run" in 2024. The logic is simple: increased demand from institutional investors like BlackRock, coupled with a limited supply of Bitcoin, could create a classic case of supply and demand, sending Bitcoin's price soaring to new heights.

Of course, the road to Bitcoin ETF nirvana is still paved with uncertainties. The SEC remains a formidable obstacle, and regulatory hurdles could delay the launch for months, or even years. But one thing's for sure: the wheels are in motion, and the mere fact that BlackRock, Nasdaq, and the SEC are actively engaged in talks is a significant step forward for the crypto community.

As per a FOX Business article, the SEC is expected to approve the first spot Bitcoin exchange-traded fund (ETF) by January 10, 2024, enabling mainstream cryptocurrency adoption in the U.S. If approved, retail investors would have access to regulated platforms like the NYSE and Nasdaq.

ETF Speculation, Skyrocketing Predictions, and Market Whispers

The continuous dialogue between major financial entities like BlackRock, Nasdaq, and the SEC.webp

Samson Mow's Insightful Bitcoin ETF Forecasts

Crypto luminary Samson Mow spotlights ETFs as pivotal in crypto's realm, advising Bitcoin ETF aspirants to showcase their edge for a bigger slice of Assets Under Management. 

Amid the SEC's deliberation on leading applications from giants like BlackRock and VanEck, rivals such as Bitwise are spotlighting Bitcoin's role. Mow envisions an intense marketing clash in the Bitcoin ETF arena, hinting at more celebrity-endorsed campaigns and foresees dwindling Bitcoin skepticism, cautioning against negative Bitcoin rhetoric.

The Buzz Around Bitcoin ETF Approvals

The SEC is on the brink of a verdict on Bitcoin spot ETFs, with dialogues hinting at a green light for players like BlackRock. Asset managers are aligning with SEC's "cash creates" criteria for Bitcoin ETF redemptions, bolstering approval odds. Bloomberg's Eric Balchunas and James Seyffart peg approval chances at a robust 90%.

Bitcoin's Market Trajectory and Forecasts

Crypto pundit Michael van de Poppe eyes a potential $47,000-$50,000 Bitcoin leap, fueled by anticipated spot BTC ETF nods from financial titans. Analyst Ali flags a crucial Bitcoin supply zone, signaling possible sell-offs if crossed. Bitcoin's rebound past $42,400 cements its stance in this vital supply zone.

Meanwhile, Anthony Pompliano believes over 90% of Bitcoin is in circulation and most investors won't sell. He sees tens of billions in demand with a potential spot ETF approval. However, he doesn't expect an immediate doubling of Bitcoin's price. 

Bitcoin's Potential Leap to $160K by 2024

Analysts speculate a soaring $160,000 Bitcoin value in 2024, spurred by factors like the halving event and spot ETF approvals. The April 2024 halving, historically a rally catalyst due to reduced new coin supply, is a key driver. 

Over seven major finance entities are courting the SEC for spot bitcoin ETFs, with Bitcoin advocate Michael Saylor touting this as Wall Street's most monumental event in three decades. Anticipated Federal Reserve rate cuts in 2024 could further elevate Bitcoin's worth, yet a price correction looms, given short-term holders' hefty unrealized profits.

BlackRock's Bitcoin ETF Nearing Launch Amid Regulatory Unrest

BlackRock, a financial titan, seems on the brink of launching its much-anticipated Bitcoin spot ETF, with the forthcoming approval by the Securities and Exchange Commission (SEC) driving industry speculation. Cryptocurrency analyst Crypto Rover set the rumour mills abuzz, suggesting that the BlackRock ETF launch might be just around the corner, pending regulatory clearance.

BlackRock is the world's largest asset manager and its foray into Bitcoin ETFs represents an enormous stride for mainstream cryptocurrency adoption. Market predictions indicate the potential greenlighting of the first Bitcoin spot ETF by the SEC around January 10, 2024. This likely endorsement heralds significant opportunities for retail investors, enabling widespread access to regulated platforms like the NYSE and Nasdaq and thus further propelling the maturing cryptocurrency landscape.

Dealing with Challenges: Third-Party Brokers and Custodians

BlackRock's steps towards a Bitcoin ETF have not come without a share of challenges. In the SEC’s rare, recent joint call with spot Bitcoin ETF applicants, one key criteria emerged: a commitment to a cash creation model. However, BlackRock's approach has raised certain concerns in the SEC's corridors due to its choice of using a third-party broker and Coinbase as a custodian, as indicated in its previous ETF filings.

etfissuers-jpg-optimal.webp
Redemption methods of ETF issuers. Source: X/ @JSeyff

The SEC has been cautiously navigating the complex dynamics involving third-party brokers and the risks that could arise from such arrangements. BlackRock has brought a unique angle to the table by proposing to use a "Prime Execution Agent" for its ETF funds to handle Bitcoin transactions. However, the details of who this agent would be remained undisclosed.

The situation involving Coinbase adds an additional layer of complexity, given its ongoing legal altercation with the SEC, which might affect BlackRock's ETF approval process.

The balance between innovation in Bitcoin ETFs and regulatory scrutiny.webp

Despite these potential hurdles, BlackRock and other issuers are gearing up for the launch of their ETFs. Comprehensive marketing campaigns are ongoing, seizing the opportunity to draw investors' attention to their offerings. While BlackRock's use of a Prime Execution Agent and third-party broker introduces hitherto unseen elements in the Bitcoin ETF sphere, these actions signal a thorough understanding of the evolving market dynamics. 

The Ethereum ETF Limbo: Delays, Concerns, and a Glimmer of Hope

The Ethereum ETF saga continues, with the SEC extending its decision-making period on several proposed funds, including those proposed by Hashdex, Grayscale, VanEck, and ARK Invest, leaving investors and enthusiasts in a state of anticipation. This delay, initially set for October 3rd, casts a shadow on potential market growth and restricts investors' options for diversified Ethereum exposure.

These ETFs, aiming to track the daily fluctuations of Ethereum's price, employ a mix of strategies: direct holdings of Ether, futures contracts traded on the CME, and cash equivalents. However, the SEC claims its meticulousness stems from its responsibility to ensure adherence to anti-fraud and market manipulation regulations, ultimately safeguarding investors and the public trust.

Futuristic cityscape with Ethereum logo buildings under a twilight sky, reflecting the growth of ethereum etf.webp

Seeking broader input, the SEC has invited public comments on the proposed Ethereum ETF rule changes, demonstrating a commitment to transparent decision-making. While the agency has previously approved Ethereum futures-based ETFs, spot Ether and mixed funds remain in limbo. Past delays of the VanEck and ARK 21Shares Ethereum ETF applications further cloud the outlook.

One factor casting a long shadow is the concern surrounding Ethereum's proof-of-stake consensus mechanism and its potential vulnerability to manipulation. Additionally, the industry eagerly awaits the SEC's upcoming decisions on spot Bitcoin ETFs, hoping for a ripple effect that could pave the way for Ethereum Spot ETFs.

Conclusion

The Bitcoin ETF space is electrifying, fueled by BlackRock's strategic shift and a flurry of innovative offerings. Cash redemptions seem to be the current theme, but with WisdomTree's in-kind proposition lurking and the SEC's stance evolving, the game remains open. While questions loom around tax implications and Ethereum's fate, one thing's clear: the ETF dominoes are falling, potentially paving the way for a historic Bitcoin bull run. Buckle up, the ride could be epic.

FAQs

1. Is BlackRock's IBIT ETF a sure thing?

While BlackRock's pivot aligns with the SEC's apparent preference, regulatory approval is still uncertain. Stay tuned for updates in the coming months.

2. What's the deal with carbon credits in a Bitcoin ETF?

7RCC's innovative ETF combines Bitcoin with sustainability, catering to the growing ESG investor audience. It's a unique proposition worth watching.

3. Will a Bitcoin ETF trigger a price surge?

Experts like Dan Tapiero predict significant Bitcoin growth, fueled by ETF access and increased liquidity. Buckle up for a potentially volatile ride.

4. What about Ethereum ETFs?

The SEC's silence on spot Ethereum ETFs is deafening. Public comments are invited, but regulatory approval remains a question mark.

This article has been refined and enhanced by ChatGPT.

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