US Spot Bitcoin ETF Approved
After more than ten years of waiting and rejection, the US Securities and Exchange Commission (SEC) has finally approved the first spot Bitcoin ETF (exchange-traded fund). In fact, the SEC is 10th. January 2024 approved as many as 11 spot Bitcoin ETFs, and gave investors more options for investing in the most popular cryptocurrency. Spot Bitcoin ETFs are funds that invest directly in bitcoin, and not in derivatives that follow the price of bitcoin. If you are interested in more detail about what a Bitcoin ETF is, you can read about it on one of our previous blogs . The decision of the SEC was made by voting, where 5 members were in favor of approval and 3 members were against. With this, Bitcoin became even more easily accessible to the largest capital market in the world, and turned another new page in its history.
Source: cointelegraph
How much is this ETF trading?
In the first three days of trading, spot Bitcoin ETFs generated a total volume of around $10 billion. However, not all spot Bitcoin ETFs are equally popular. Grayscale Bitcoin Trust (GBTC) dominated the competition, with more than half of the total trading volume in the first days. This is most likely a temporary phenomenon, as some investors are selling their GBTC shares in order to buy newly available alternatives. Other leading players in terms of trading volume were BlackRock (IBIT) with more than $1 billion and Fidelity (FBTC) with more than $700 million.
The Spot Bitcoin ETFs collectively own about 650,000 bitcoins, representing approximately 3% of the maximum supply of 21 million bitcoins. However, most of these bitcoins have previously belonged to the Grayscale Bitcoin Trust (GBTC). GBTC currently holds about 581,000 bitcoins, which is almost 90% of the total amount of bitcoins held by ETFs, or funds that manage them. Other spot Bitcoin ETFs have significantly fewer bitcoins in their reserves. For example, BlackRock’s ETF (IBIT) has about 25,000, while Fidelity ETF (FBTC) has about 20,000 bitcoins. Grayscale’s share is expected to decrease, given the fact that other ETF providers have offered much more favorable terms for holding bitcoins with them. Likewise, in the long term, we believe that the total amount of bitcoins owned by these ETFs, or funds, will increase drastically, but it is still impressive that in just one week, more than 85,000 bitcoins have been accumulated.
Source: cointelegraph
How much will individual ETFs earn?
All these funds charge a commission for holding bitcoins in their reserves. This commission is deducted from the value of the fund and represents a cost for investors. However, given that there is a lot of competition among issuers of spot Bitcoin ETFs, some of them have temporarily reduced or eliminated their commissions to attract more investors, but generally these commissions will be minimal. For example, Fidelity will charge 0% until the 31st. July 2024 year, and then will increase the commission to 0.25%. Similarly, Invesco will charge 0% for the first six months or the first $5 billion in assets, then increase the fee to 0.59%. Other spot Bitcoin ETFs have different commissions, ranging from 0.20% for iShares Bitcoin Trust (IBIT), which is the cheapest, to 1.50% for Grayscale Bitcoin Trust (GBTC). Fees at these new funds are significantly lower than those of others, such as Grayscale’s trusts for other cryptocurrencies that charge between 2% and 3%, or bitcoin futures ETFs that charge around 0.95%.
Source: cointelegraph
Bitcoin in a wallet or in an ETF
One of the key questions raised after the approval of these ETFs is whether it is better to hold Bitcoin in your digital wallet or in an ETF. Many crypto enthusiasts will say that it is better to have Bitcoin in your wallet, because it means that you have full control over your money, rather than handing it over to a third party. Bitcoin is a decentralized currency that does not depend on any institution or government. This means that there is no one who can freeze, seize or censor your transactions. Also, by having Bitcoin in your wallet, you can take advantage of all the advantages offered by the crypto ecosystem, such as speed, transparency, privacy and innovation. On the other hand, investing in a Bitcoin ETF has its drawbacks. First, you don’t own the actual Bitcoin, just a portion of the fund that tracks it. This means that you are exposed to the risk of the fund failing, being hacked or its rules being changed. Second, you pay high fund management fees, which reduce your earnings. Third, you are limited to market hours and regulations that may affect your ability to trade. Fourth, you lose some of the anonymity and security that Bitcoin provides, because you have to reveal your identity and entrust your money to someone else. Therefore, if you are a crypto enthusiast who values freedom, independence and innovation, it is better to keep Bitcoin in your wallet than in an ETF. On the other hand, if you are afraid of losing your money, losing your keys or access to it, and prefer to trust a third party such as one of the funds that hold the ETF, then an ETF may be a better option for you.
Source: cointelegraph
Conclusion
After more than ten years of waiting, we got not only one but eleven Spot Bitcoin ETFs in the USA, the country with the largest capital market, and thus the greatest potential for investing in Bitcoin. In today’s blog, we showed you the results of trading these ETFs in the first week, and it will definitely be interesting to see how the whole situation with ETFs will develop further. We also answered the question, should you keep real bitcoin in your wallet or buy it through ETFs. We hope you enjoyed today’s blog and learned something new, if you have any questions you can always contact us on our social networks ( Twitter , Instagram ).