BlackRock’s ETF Filing Sparkle Bullish Sentiments, Bitcoin Shorts lose $16 M
TL; DR
BlackRock has filed an application for a Bitcoin exchange traded fund that will be listed on Nasdaq.
The Securities and Exchange Commission (SEC) has not yet indicated whether or not it will approve the crypto ETF.
In the past, the SEC disapproved of BTC ETFs for Grayscale, Valkyrie Investments, NYDIG, SkyBridge, ARK Invest, Fidelity, Galaxy Digital, VanEck and WisdomTree.
The news of a possible BTC ETF launch resulted in a bullish market outlook.
Introduction
Over the years new products and services have come onto the crypto sector and have influenced their adoption and international recognition. The new wave of crypto regulations, for instance, is a recognition of the potential of crypto assets. Derivatives such as crypto futures are among the digital assets that are driving the adoption of cryptocurrencies.
Bitcoin futures and options are popular digital assets that individuals and firms can invest in without directly owning cryptocurrencies. In this piece, we discuss the recently proposed Bitcoin Exchange Traded Fund (ETF). Also, the crypto market awaits to see if the SEC will approve BlackRock’s Bitcoin ETF.
BlackRock’s Bitcoin ETF Plan
BlackRock, the world’s biggest asset manager that manages over $10 trillion, plans to launch its publicly traded spot Bitcoin exchange-traded fund (ETF) in the United States after it filed its application on Thursday, 15 June 2023.
In its filing to the Securities and Exchange Commission (SEC), the company said that it intends to sell the investment assets as iShares Bitcoin Trust with Coinbase Custody Trust Co being the custodian for the Bitcoin.
BlackRock stated that if the ETF is approved it will be listed on the Nasdaq. Additionally, Nasdaq will oversee the pricing of the ETF, a critical factor that may influence SEC to approve it. Previously, the SEC rejected applications for the launch of BTC ETFs fearing that the market may manipulate their prices.
BlackRock Applies for Bitcoin ETF - Watcherguru
If SEC approves this ETF, it will be a positive move since BlackRock has a wide reach which will enable retail crypto investors to invest in Bitcoin through these shares. Institutional investors like pension funds will likely hold that asset.
Why the market Supports BlackRock’s Bitcoin ETF Launch?
BlackRock ETF filing has been received positively by the market. Currently, there is no way crypto investors can acquire Bitcoin in the form of shares except for Grayscale Bitcoin Trust which is not available on many stock exchanges. This is contrary to the way people can easily acquire Bitcoin on different exchanges like Gate.io, Coinbase and Binance, among others.
Read also: BlackRock Launches First Bitcoin Private Trust
Unfortunately, Grayscale also charges a high fee of 2% which stifles its acceptance. On the contrary, BlackRock aims to offer its ETF at a lower fee of less than 0.5%.
Mike Novogratz, Galaxy Digital CEO, said that if the SEC approves the BlackRock ETF filing it will be the “the best thing that could happen to $BTC.”
Another crypto analyst Steven Lubka, the managing director at Swan Bitcoin, believes that if the SEC approves the BlackRock’s BTC ETF the value of Bitcoin may reach $1 million. However, the sad thing is that a few rich institutional investors like BlackRock, Goldman Sachs and other ETF issuers are likely to benefit from that situation as they will invest much in them.
Will SEC approve BlackRock’s Application?
According to Eric Balchunas, a senior ETF analyst at Bloomberg, it is unlikely that the SEC will approve the filing for the BTC ETF. He said, “There’s been no signs at all SEC willing to approve, but BlackRock is very connected so maybe they know something?”
Several market analysts share the same sentiment based on the SEC’s previous stance against the BTC ETF. Previously, the SEC rejected applications from a number of asset managers that wanted to launch spot BTC ETFs. Grayscale, Valkyrie Investments, NYDIG, SkyBridge, ARK Invest, Fidelity, Galaxy Digital, VanEck, and WisdomTree applied for spot BTC ETFs but their applications were turned down.
In June 2022 Grayscale sued the SEC for its hard stance on spot BTC ETF. It claimed that the SEC was inconsistent in its treatment of similar investment assets. Nevertheless, the SEC approved several Bitcoin futures-based ETFs which are more complicated and more expensive than spot crypto ETFs.
Hype around BlackRock’s BTC ETF Pushes Crypto prices up
The hype surrounding BlackRock’s anticipated BTC EFT launch has pushed prices of several major cryptocurrencies up. On Friday, 16 June, the Bitcoin price regained the $25,500 level after its previous two days’ drop to as low as $24,860. The values of Polygon Network’s MATIC and Cardano’s ADA also surged above their previous two-day levels.
However, Dogecoin (DOGE) and Litecoin (LTC) were the greatest movers within the 24-hour period, as they gained by 4% and 3.3% respectively. Bitcoin’s recent firm position in the market impacted negatively the BTC shorts that were liquidated, thereby incurring around $16 million in loss.
Generally, there was a bullish outlook in the market, indicated by the Fear & Greed Crypto Index that rose from 41 to 47. As such, the crypto market has turned from fear to hope.
Conclusion
Recently, BlackRock, an asset management firm, applied for a Bitcoin exchange traded fund (BTC ETF). However, the SEC has not yet indicated whether or not it will approve the applications. Nevertheless, that move ignited hope within the crypto market, shown by the associated bullish market sentiment that pumped the prices of several cryptocurrencies including BTC, ADA, LTC and Doge.
