The US Securities and Exchange Commission (SEC) is widely expected to approve spot Bitcoin exchange-traded funds (ETFs) this week, a development that crypto investors have been hotly anticipating.
In the latter half of 2023, approval became increasingly likely as the SEC began to signal its willingness to consider such products. Market participants have pinpointed Wednesday (January 10) as the day to watch for a decision.
Approval from the SEC is expected to open the door for a new wave of investors to enter the Bitcoin market, as ETFs provide a more accessible and regulated way to gain exposure to the notoriously volatile cryptocurrency.
Competition intensifies as firms lower spot Bitcoin ETF fees
Spot Bitcoin ETF hopefuls attracted attention earlier in the week, when they began amending their S-1 applications to offer reduced fees, attempting to out-compete each other in a so-called “fee war.” Most experts agree that the SEC will approve multiple applications simultaneously to avoid giving any investment firm a first-player advantage.
BlackRock (NYSE:BLK), VanEck, WisdomTree Investments (NYSE:WT), Fidelity Investments and Valkyrie Investments have all submitted amended forms. Some firms, such as ARK Invest, Bitwise Asset Management, and Invesco and Galaxy Digital, which are working together on a spot Bitcoin ETF, are waiving fees for the first six months, or until trading volumes reach a predetermined value, whichever comes first. For ARK Invest and Bitwise, the threshold is set at US$1 billion, while the threshold is US$5 billion for the Invesco and Galaxy partnership.
Bloomberg senior ETF analyst Eric Balchunas expressed surprise at the firms’ willingness to go lower. He mentioned BlackRock’s amended fee of just 0.3 percent in a post on X, formerly known as Twtter, saying it is cheaper than he predicted and will make it difficult for other players to compete.
Meanwhile, traders have been driving up the price of Bitcoin. According to analysts at Fineqia International, Bitcoin passed US$47,000 on Tuesday (January 9), an increase of 6.9 percent compared to Monday (January 8). Meanwhile, the Defiant reported reported that the Ethereum/Bitcoin ratio fell to its lowest point since May 2021. The ratio was reportedly as low as 0.048 percent as an influx of traders rushed to take advantage of Bitcoin’s rally.
False spot Bitcoin ETF approval sparks market frenzy
Speculation from market participants intensified around 4:00 p.m. EST on Tuesday, when the SEC’s official X account released a since-deleted post stating that all applications for spot Bitcoin ETFs had been approved. Minutes later, the price of Bitcoin was at its highest point of the day, rising to just below US$48,000.
Shortly after the post, SEC Chairman Gary Gensler said the following:
After Gensler’s update, the Bitcoin price fell and stabilized between US$45,500 and US$46,000.
On Monday, Gensler posted a short advisory on X, warning potential investors of the risks associated with investing in crypto and reminding market participants that not all crypto investment projects comply with SEC guidelines.
As of 1:15 p.m. EST on Wednesday, Bitcoin was trading at US$46,265.39, representing a 0.7 percent drop over the last 24 hours. The Ethereum/Bitcoin ratio was around 0.053 at that time.
By press time, the SEC had yet to announce the approval of spot Bitcoin ETFs in the US.
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Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
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