Spot Bitcoin ETFs Set to Start Trading, Fueling Market Share Battle
Spot Bitcoin ETFs are set to start trading in the US on Thursday, marking a significant moment for the cryptocurrency sector.
Several exchange-traded funds (ETFs) linked to the spot price of Bitcoin are set to start trading in the United States on Thursday before the opening bell, marking a significant moment for the cryptocurrency sector that has sought regulatory approval for over a decade.
The approval from the Securities and Exchange Commission (SEC) was granted late on Wednesday, signaling a favorable outcome for 11 spot Bitcoin ETFs. This decision concluded months of negotiations with major asset managers including BlackRock, Ark Investments and 21Shares, Fidelity, Invesco, and VanEck.
However, while BlackRock’s iShares Bitcoin Trust and Grayscale Bitcoin Trust commenced trading in the early premarket hours, VanEck Bitcoin Trust, Invesco Galaxy Bitcoin ETF and ARK 21Shares Bitcoin ETF are only anticipated to initiate trading on Thursday.
Asset Managers Competiting for Market Share
The regulatory approval is anticipated to ignite fierce competition for market share among issuers, who have already reduced fees for their products significantly below the standard in the US ETF industry.
As all ETFs tracking an asset’s price aim to provide the same return to investors, market share is typically influenced by fees. Therefore, the issuers have revealed fees as minimal as 0.20%, and some companies have extended offers to waive them for a specific period or until a predetermined amount in assets is reached.
Moreover, several ETF issuers, such as Bitwise and VanEck, have initiated marketing campaigns promoting their products, emphasizing Bitcoin as a viable investment.
Bitcoin Rallies Post SEC’s Approval
In the lead-up to the SEC decision, Bitcoin (BTC) experienced a notable surge of over 150% in 2023, while its market capitalization exceeded $900 billion as of January 10, according to CoinGecko. In a muted reaction to the news, the largest and most well-known cryptocurrency briefly scaled $47,000.
Meanwhile, the token supporting the Ethereum (ETH) blockchain network, increased by 5% to $2,653.8, marking its highest value since May 2022.
The SEC had previously declined all spot Bitcoin ETFs due to concerns regarding investor protection. Expectations for a shift in its position increased last year following a federal appeals court ruling, which stated that the agency was mistaken in rejecting Grayscale’s application to transform its existing Bitcoin Trust into a spot Bitcoin ETF.
The approval of several spot Bitcoin ETFs by the SEC marks a significant milestone for the cryptocurrency industry after years of regulatory anticipation. This approval precedes the beginning of a fierce competition for market share among issuers, expected to commence as soon as all ETFs enter the market.
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