Bitcoin investors are on tenterhooks as they wait for the first U.S. spot Bitcoin exchange-traded fund (ETF) to be approved by the Securities and Exchange Commission (SEC). Experts state that this approval could change the rules of the game for investors.
Although the SEC has not yet given the green light to Bitcoin ETF applications, industry experts predict that initial approval could be granted as early as 2024. Bryan Armour, director of North American passive strategies research at Morningstar, warned that Bitcoin will remain a “highly volatile and speculative asset.”
Several asset management firms, including Blackrock, WisdomTree, and Valkyrie, are waiting in line for SEC approval to launch a spot BTC ETF. Bryan Armor believes this will be “the best product on the market” for ETF investors because all other options currently have varying degrees of flaws, according to the analyst.
Currently, US investors can purchase BTC futures ETFs, which hold Bitcoin futures contracts. These contracts are agreements to buy or sell the asset at a predetermined price at a later date. The highly anticipated BTC spot ETF will invest directly in BTC.
Armour: “A rally may also be triggered, a sales wave may occur to collect profits”
If the SEC approves the spot Bitcoin ETF, Armor expects a “bulk approval” in which multiple ETF listings would occur on the same day. He also notes that the SEC appears to be taking the latest filings more seriously, making him more optimistic than ever about a Bitcoin ETF.
Armor notes that the confirmation could trigger a BTC rally, but there is also a chance the price could drop as investors sell to collect their profits.
Ben Smith, a certified financial planner and founder of Cove Financial Planning in Milwaukee, believes a spot Bitcoin ETF could fit into a diversified portfolio for more aggressive investors with a higher risk appetite.
According to a 2022 Nasdaq survey of 500 advisors, 72% of financial advisors said they would be more likely to invest in cryptocurrencies if spot ETFs were approved in the US.
*This is not investment advice.