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News/Bitcoin ETF Frenzy: Countdown to Launch or Another Dead End?

Bitcoin ETF Frenzy: Countdown to Launch or Another Dead End?

Van Thanh Le

Jan 8 2024

5 months ago4 minutes read
Chibi cubic robot on Wall Street, excitedly displaying Bitcoin ETF trends on a tablet

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The Bitcoin ETF Race Heats Up: Filings Fly, Fees Drop, and Launch Day Nears

In a landmark week for Bitcoin, the financial world buzzes with anticipation as the potential approval of spot Bitcoin exchange-traded funds (ETFs) looms. This pivotal moment sees issuers diligently refining their Form S-1 amendments, a crucial stride towards gaining the nod from the Securities and Exchange Commission (SEC).

As the clock struck 8:00 am Eastern Time on January 8, asset managers put the final touches on their spot Bitcoin ETF filings. This meticulous process followed hot on the heels of January 5, when 11 asset managers submitted 19b-4 amendments for their applications. The S-1 amendments are expected to shed light on fee structures and the identities of market makers, echoing the forecasts of Bloomberg ETF analyst Eric Balchunas.

The SEC's decision on these filings is eagerly awaited, with expectations set for January 9 or 10. However, it's crucial to note that S-1 filings are just one piece of the puzzle. For an ETF to launch, it must clear both S-1 and 19b-4 hurdles with the SEC.

Diverse financial analysts in a high-tech command center, strategizing over Bitcoin ETF market data.webp

In the spotlight are 11 asset management heavyweights, including BlackRock, Valkyrie, Grayscale, and Bitwise, to name a few. Each is poised to play a significant role in shaping the Bitcoin ETF landscape.

The competition heats up as Ark slashes its fee to a mere 0.25% from 0.8%, sweetening the deal with a six-month fee waiver or until it hits $1 billion in assets. BlackRock isn't far behind, proposing a 0.3% fee that dips to 0.2% for the first year or until $5 billion in assets is reached. Not to be outdone, Invesco Galaxy's ETF (BTCO) sets its fee at 0.59%, while WisdomTree aims for a 0.5% charge.

BlackRock's ETF boasts a net asset value of $9,980,032.71 as of January 5, 2024. Invesco Galaxy and WisdomTree aren't trailing far behind, having seeded approximately $4.8 million and $2.5 million in Bitcoin, respectively. These investments translate into significant holdings, with WisdomTree acquiring 50,000 shares.

SEC Nears Bitcoin ETF Verdict: Hype Meets Caution as Billions Hang in the Balance

The financial world watches with bated breath as the US Securities and Exchange Commission (SEC) prepares to deliver its verdict on Bitcoin exchange-traded funds (ETFs), potentially opening the floodgates to billions in investment and marking a watershed moment for the digital asset. 

Bloomberg analysts are betting big on this possibility, pegging the odds at a confident 90%, a stark contrast to the slightly more conservative 83% chance seen on Polymarket. This optimism hinges on the SEC's response to amended filings from financial heavyweights like BlackRock, Grayscale, and Fidelity. The approval of these filings is a crucial step towards launching these groundbreaking ETFs.

brave_screenshot_polymarket.com.png
Source: Polymarket

The market is on tenterhooks, anticipating a decision that could funnel billions into Bitcoin, marking a historic milestone. But the path to approval is intricate, involving two critical steps: the SEC's nod to 19b-4 filings by exchanges and S-1 filings by issuers.

In the competitive world of ETFs, fee structures are a battleground. Industry experts, including Nate Geraci, highlight the fierce competition, with firms like Fidelity and Invesco leading the charge with their aggressive pricing strategies.

Speculation is rife about potential launch dates, with some suggesting these ETFs could hit the market as soon as the SEC gives the green light, potentially unlocking significant investor funds. A key focus is on Grayscale’s GBTC, which, with its $27 billion in assets, could become one of the top ETFs by assets under management (AUM) upon its conversion to an ETF.

The marketing strategies of these ETFs are under the microscope, especially given the tight advertising regulations in the sector. Major firms are expected to roll out innovative approaches to navigate these challenges.

Voices from the crypto community add color to the narrative. Scott Melker, a crypto advocate, predicts a staggering $570 billion inflow into Bitcoin post-ETF approval, assuming a modest 0.5% investment from assets managed by Registered Investment Advisers (RIAs). 

However, this optimism isn't universal. Investment adviser Rick Ferri casts a skeptical eye on these projections, questioning the readiness of advisers to jump on the Bitcoin ETF bandwagon. Meanwhile, investor Bruce Fenton sees the ETF as a game-changer, especially for brokers and financial advisers currently on the sidelines of the Bitcoin market.

The SEC, while setting a critical deadline for issuers that could see spot Bitcoin ETFs trading as early as January 11, tempers the excitement with a note of caution. The regulator, known for its stringent stance on investor protection, recently reiterated warnings about the risks associated with meme stocks, cryptocurrencies, and NFTs

Lori Schock, the SEC director, specifically pointed out the volatility and price fluctuations inherent in the crypto sector. This cautionary stance is underscored by the SEC's history of penalizing celebrities for improper crypto endorsements, with Kim Kardashian's $1.26 million settlement for promoting Ethereum Max being a case in point.

Bitcoin Makes a Play for Everyday Purchases: From E-commerce Giant to Local Shop

Japan's e-commerce titan, Mercari, is set to revolutionize its payment system by integrating Bitcoin. By June, shoppers on Mercari can use Bitcoin, a move facilitated by its blockchain arm, Melcoin. While prices will still be shown in yen, the convenience of Bitcoin payments is a game-changer, with Melcoin seamlessly converting Bitcoin into yen for sellers. 

This innovative step follows Mercari's launch of its own Bitcoin exchange in March 2023, offering users the flexibility to purchase Bitcoin with various in-app funds. The company's financial health is robust, as evidenced by a substantial profit surge in the third quarter of 2023.

Stylized global map showing the worldwide impact and adoption of Bitcoin ETFs.webp

2023 marked a watershed year for Bitcoin, as its acceptance by in-person merchants nearly tripled, catapulting the count to over 6,000 worldwide. This surge, meticulously tracked by BTC Map, a Bitcoin merchant mapping provider, paints a vivid picture of the cryptocurrency's expanding footprint in the global market.

The geographical spread of Bitcoin-accepting vendors is as diverse as it is intriguing. Latin America emerges as a hotbed for Bitcoin transactions, with Europe and the United States not far behind in embracing this digital currency. Southeast Asia, led by the Philippines, is also making significant strides in this arena. 

However, the landscape isn't uniform. East Asia, particularly China, remains a laggard, primarily due to its stringent cryptocurrency ban. Similarly, India and Russia show tepid adoption rates, reflecting varied regulatory climates and market dynamics.

brave_screenshot_btcmap.org.png
Source: btcmap.org

This remarkable growth in Bitcoin acceptance mirrors a paradigm shift in consumer behavior. It's a clear indicator of the increasing integration of cryptocurrencies into the fabric of mainstream commerce. Interestingly, this trend has persisted despite Bitcoin's notorious price volatility throughout 2023. It seems that the allure of Bitcoin transcends its fluctuations for both consumers and merchants.

Speaking of merchants, their approach to Bitcoin is pragmatic. Many opt to convert Bitcoin into fiat currencies post-transaction. This trend underscores a preference for immediate liquidity, suggesting a cautious but optimistic embrace of cryptocurrency. 

For businesses, the advantages of accepting Bitcoin are manifold. Lower transaction fees, the finality of transactions (a boon in reducing chargebacks and fraud), access to international markets, and enhanced customer convenience and security are just some of the benefits that are turning heads in the business world.

Conclusion

The potential approval of Bitcoin ETFs hangs heavy in the air, stirring excitement and anticipation for a potential flood of investment. While regulatory hurdles remain, the race for the first ETF and increasing merchant adoption paint a picture of a maturing Bitcoin ecosystem poised for wider mainstream integration.

FAQs

1. When will the SEC decide on the Bitcoin ETF applications?

The SEC is expected to announce its decision on the amended filings between January 9th and 10th, 2024. However, approval doesn't guarantee immediate launch as ETFs need to clear both S-1 and 19b-4 hurdles.

2. Which firms are competing for the first Bitcoin ETF, and how aggressive are their fees?

BlackRock, Ark Invest, Grayscale, and Invesco Galaxy are among the key players. Ark is leading the fee war with a 0.25% charge initially, while BlackRock counters with a 0.3% fee that lowers to 0.2% for specific conditions.

3. What could Bitcoin ETF approval mean for the market?

Analysts predict billions of dollars could flow into Bitcoin, potentially boosting its price and attracting more institutional investors. Grayscale's GBTC could become a top ETF with its massive $27 billion asset base.

4. How is Bitcoin adoption progressing beyond the ETF race?

E-commerce giant Mercari integrating Bitcoin in Japan is a major step. Additionally, the number of Bitcoin-accepting merchants tripled in 2023 to over 6,000 worldwide, with Latin America leading the charge.

This article has been refined and enhanced by ChatGPT.

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