The first bitcoin exchange-traded fund in the United States is awaited by investors, who believe it will be important for investors when it launches, according to experts.
Applications for spot bitcoin ETFs have not yet been approved by the Securities and Exchange Commission, but analysts predict that the first approval may occur as early as 2024.
The asset is still quite speculative and volatile, according to Bryan Armour, Morningstar’s director of research for passive strategies in North America.
The first bitcoin exchange-traded fund in the United States is expected to be approved by regulators soon, and analysts predict this may be a big development for bitcoin investors.
Bitcoin reached an 18-month high last week of $37,970 following BlackRock’s initial steps toward an ether ETF. Although the price of bitcoin has more than quadrupled since the beginning of 2023, it is still far less than what it peaked in November 2021.
In order to launch a spot bitcoin ETF, at least nine asset management companies, including Valkyrie, BlackRock, and WisdomTree, are awaiting clearance from the Securities and Exchange Commission. According to experts, the first clearance might occur before 2024.
“This would be the best product on the market for ETF investors,” stated Bryan Armour, Morningstar’s director of research for passive strategies in North America. “There are currently flaws in all the other options, varying in severity.”
At now, exchange-traded funds (ETFs) that possess bitcoin futures contracts—agreements to purchase or sell the commodity at a later date for a predetermined price—are available to American investors. The eagerly anticipated bitcoin spot ETF would make direct investments in the virtual currency.
Armour expects a “batch approval,” with numerous ETF listings on the same day, if the SEC approves a spot bitcoin ETF. With regard to applications, he stated, “I would expect them to rule on spot ETFs holistically because most issuers are taking similar approaches.”
According to Armour, “there are a lot of encouraging signs that the SEC is paying closer attention to the most recent round of filings.” “My optimism regarding a bitcoin ETF has increased significantly.”
According to Armour, some cryptocurrency speculators anticipate a bitcoin rise following approval, but it’s also likely that the price may fall as investors sell to realize their winnings.
To reduce your risk of losing money, experts advise limiting your exposure to cryptocurrencies, say to 1% to 5% of your total investment. Armour continued, “It still remains a highly speculative and volatile asset.”
According to a 2022 Nasdaq study of 500 advisers, 72% of financial advisors stated they would be more willing to invest in cryptocurrency if spot ETFs were authorized in the United States.
