Bitcoin ETF

February 06, 2024

I’m sure you've been waiting with bated breath to see a Bitcoin Spot ETF. Ok, maybe you haven’t, and maybe you don’t even know what that means. There has been a preapproved Bitcoin Futures ETF for the past two years. Unfortunately, the Futures ETF is structured so there is a noticeable drag on performance. I won’t go into the specifics, but it wasn’t ideal.

A spot ETF is an ETF that tracks a commodity (like Bitcoin) and the price movement of the ETF should be very consistent with the value of Bitcoin. It took the SEC a long time to approve this, and part of the delay was defining a credible market for these ETFs to track against Bitcoin itself. Well, necessity is the mother of invention. BlackRock, Fidelity, Arch, and all the other investment firms who wanted to have a spot ETF for Bitcoin came up with methods to satisfy the SEC. The SEC didn’t want to pick favorites, so they approved 11 different Bitcoin Spot ETFs on the same day.

Now the floodgates are open, and anyone can own Bitcoin in their investment accounts at practically any custodian. This is one more step for the legitimacy and credibility of Bitcoin. If you had asked me two years ago, I would not have expected this approval in 2024; however, now that it is here, Bitcoin will be a bigger part of investing for many investors, managers, institutions, and even governments. Having easy access and sufficient liquidity will bring more cautious investors to Bitcoin.

What’s next? I have been a fan of Bitcoin since 2020, and I think it will continue to do well as it is better understood. There is talk that the founder may be revealed, which would be a very interesting turn of events. That revelation could send shockwaves through the community and possibly the price of Bitcoin would be affected.