Blackrock Bitcoin ETFs: The Latest
BlackRock Bitcoin exchange-traded fund (ETF) trended on all investment newswires in June after BlackRock, the biggest asset manager worldwide, filed for an ETF backed by BTC, the largest digital asset by market capitalization.
The move for a Blackrock Bitcoin ETF was made by the investment firm to give clients exposure to the flagship coin.
The company disclosed that Coinbase Custody, a New York-based business that provides cold-storage services for the digital assets of third parties, will serve as custodian for its iShares Bitcoin Trust, details of its filing with the US SEC (Securities and Exchange Commission) showed.
While this has been seen as a great move by a large investment company, the SEC has shown resistance when it comes to the approval of spot BTC ETFs.
BlackRock Bitcoin ETF: What is it?
To understand this what the Blackrock Bitcoin ETF is, you should know what ETF means. According to Investopedia, ETF is a kind of investment security pool that operates similarly to a mutual fund. It tracks commodities, particular sectors, indexes, and other assets like cryptocurrencies.
It differs from mutual funds because it can be bought and sold on a stock exchange in the same way as the regular stocks of Mastercard, Visa Inc., and other major corporations with ticker symbols on the London Stock Exchange (LSE), New York Stock Exchange (NYSE), and others.
SPDR S&P 500 ETF is the first exchange-traded fund, and it continues to track the S&P 500 Index.
With this in mind, what BlackRock has applied for is a spot BTC ETF. This would track the underlying market price of the first blockchain-backed digital currency.
Analysts at Forbes Advisor believe this product will expose investors to the coin without becoming crypto asset holders.
BlackRock Bitcoin ETF is not the first being considered by the SEC
As of July 2023, the SEC has not approved any ETFs that directly own BTC. Instead, existing Bitcoin ETFs only hold futures contracts or other ETFs and stocks of companies that have direct exposure to Satoshi Nakamoto’s innovation.
In 2022, Grayscale Investment LLC, the largest digital asset management firm, saw its request to convert its Grayscale Bitcoin Trust into an ETF rejected by the SEC.
Angered by the decision, Grayscale sued because the regulatory body had already approved BTC futures ETFs, as earlier highlighted.
Aside from Grayscale, CBOE Global Markets, New York Digital Investments Group (NYDIG), and Fidelity have also had their spot BTC ETFs rejected by the apex regulatory institution in the USA.
Impact of the filing on the coin
In crypto, there are three major price drivers; the triggering of a staking feature that helps investors earn passive income, the listing of a virtual asset on a major exchange, and the acceptance of a coin as a transactional currency by a mainstream company.
Ordinarily, due to the SEC's rejection of other companies’ attempts, a filing of an exchange-traded fund related to the most popular cryptocurrency should have been discarded by millions of traders across the globe.
After trading below $30,000 for two months, the asset rebounded strongly from $25,576.28 on 16 June and tested a then-high of $31,460.05 on 6 July.
As of 21:00 on 13 July 2023, it was exchanging hands for $31,484.21, a 23% rise in less than one month, data from crypto price tracker CoinMarketCap showed.
Such bullishness is the reason why analyst Richard Adrian at FX Leaders foresees a substantial rise in the price of the crypto.
According to him, the digital currency could reach the maximum price of $85,000 due to positive market sentiment, hawkish central bank decisions, and mainstream adoption of the decentralized finance sector by the year's close.
The latest on spot Bitcoin ETFs globally
On 13 July 2023, multiple news outlets reported that London-based multi-asset investment platform Jacobi Asset Management would launch the first spot BTC ETF in Europe before the close of the year.
This announcement comes exactly a year after it was scheduled to premiere on the Euronext exchange in Amsterdam in July 2022.
The asset manager said it chose to launch its product in the fall due to improved demand for crypto assets.
Since security has become an integral issue in this sector due to the billions of pounds worth of stolen digital assets, Jacobi has chosen Fidelity Digital Assets as the custodian.
The SEC may not grant exchange-traded funds related to the spot market due to the agency's consistent consideration of many of the assets, including BTC, being securities in disguise.
Whatever happens, BlackRock has created an impressive base on which other potential applicants can thrive to see this hurdle through.
That said, Ripple has won its two and half year case against the agency. This could be a turning point in the type of products it could approve for trading in the future.
Author: Raphael Minter
Raphael Minter/ Albert Zuhnden (preferred pen name) is a crypto finance writer, data miner, and fundamental analyst. Raphael has written hundreds of articles about centralized and decentralized financial instruments such as precious metals, commodities, stocks, and cryptocurrencies. He broke into digital finance in 2016 and believes digital assets and blockchain technology is the future of finance.