US SEC approves Bitcoin ETFs: What exactly are they?
The US Securities and Exchange Commission (SEC) has approved the first US-listed exchange-traded funds (ETFs) for Bitcoin, marking a major milestone for the cryptocurrency world. This decision followed a chaotic 24 hours, during which a tweet from the SEC's X account falsely announced the approval of Bitcoin ETFs. The news caused Bitcoin's price to surge by over $1,000 before the SEC clarified that its account was hacked.
What are Bitcoin ETFs
SEC's approval means that 11 Bitcoin ETFs will now be available in the US, making it easier for investors to invest in cryptocurrencies without directly purchasing them. An ETF is an easy way to invest in assets or a group of assets without having to directly own them. ETFs can be traded on stock exchanges. This move is expected to bring cryptocurrencies further into the financial mainstream. Some products are expected to begin trading as early as today.
SEC's skepticism and concerns
Although the SEC approved the new ETFs but stays skeptical about cryptocurrencies. It also clarified that its decision does not mean it approves or endorses Bitcoin. SEC Chairman Gary Gensler warned investors about the risks associated with Bitcoin and crypto-related products. Commissioner Caroline Crenshaw expressed concern that these products could flood markets and end up in retirement accounts of US households who cannot afford to lose their savings due to fraud and manipulation prevalent in spot Bitcoin markets.
Impact on Bitcoin price and market
As the news of approval came, Bitcoin's price rose only around 3%, surging past $47,000. The world's most popular crypto barely budged because SEC's greenlight has been expected for months. However, since October, Bitcoin has rallied more than 70% as investors have been assuming approval was a certainty. Standard Chartered analysts predict that ETFs could draw $50bn to $100bn this year alone, potentially driving Bitcoin's price as high as $100,000.
