A new exchange-traded fund (ETF) that tracks the price of bitcoin has been launched by Invesco and Galaxy Digital. The Invesco/Galaxy Bitcoin Spot ETF, which trades under the symbol $BTCO, is the first of its kind to use the actual cryptocurrency as its underlying asset.
The ETF is now officially listed by the Depository Trust & Clearing Corporation (DTCC), the world’s largest securities depository and clearinghouse. This means that investors can buy and sell shares of the ETF through their brokerage accounts, without having to deal with the technical challenges of owning and storing bitcoin directly. The ETF aims to provide exposure to the performance of bitcoin, minus fees and expenses, by holding bitcoin in a segregated custodial account.
The custodian, Galaxy Digital Asset Management, is a subsidiary of Galaxy Digital, a leading crypto-focused financial services firm founded by Mike Novogratz. The ETF also employs a network of market makers and authorized participants to ensure liquidity and price discovery. The Invesco/Galaxy Bitcoin Spot ETF is designed to appeal to both institutional and retail investors who want to gain exposure to the rapidly growing crypto market.
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According to Invesco, the ETF offers several benefits over other bitcoin investment vehicles, such as lower costs, higher transparency, tax efficiency, and regulatory oversight. The ETF also has a competitive management fee of 0.95%, which is lower than some of the existing bitcoin trusts and funds.
The launch of the Invesco/Galaxy Bitcoin Spot ETF comes amid a surge in demand for crypto-related products, especially in the US market. Several other firms, including VanEck, Valkyrie, and ProShares, have filed applications with the Securities and Exchange Commission (SEC) to launch their own bitcoin spot ETFs, but none have been approved yet.
The SEC has been cautious about approving such products, citing concerns about market manipulation, fraud, and investor protection. However, the SEC has recently approved several bitcoin futures ETFs, which use contracts that track the future price of bitcoin, rather than the actual cryptocurrency.
Bitcoin is a volatile asset that has experienced significant price fluctuations over the years. However, despite the risks and uncertainties, there is a remarkable statistic that shows the resilience and profitability of this cryptocurrency: 82% of every Bitcoin holder is in profit.
What does this mean? It means that the majority of people who own Bitcoin have bought it at a lower price than the current market value. This implies that they have made a positive return on their investment, regardless of when they entered the market. This is a remarkable achievement, considering that Bitcoin has gone through several cycles of boom and bust, reaching highs of over $60,000 and lows of below $4,000.
How is this possible? One possible explanation is that Bitcoin has a limited supply of 21 million coins, which creates a scarcity effect and increases its value over time. Another possible explanation is that Bitcoin has a loyal and growing community of supporters who believe in its potential as a global store of value and medium of exchange. These supporters tend to hold on to their coins for the long term, rather than sell them at the first sign of trouble. This creates a strong demand for Bitcoin and reduces its volatility.
What are the implications? This statistic suggests that Bitcoin is a profitable and attractive investment for many people, especially those who have a long-term vision and a high tolerance for risk. It also suggests that Bitcoin has a strong network effect, where more users and adoption lead to more value and security.
However, it is important to note that past performance is not a guarantee of future results, and that Bitcoin still faces many challenges and uncertainties, such as regulation, competition, innovation, and security breaches. Therefore, anyone who wants to invest in Bitcoin should do their own research, understand the risks, and only invest what they can afford to lose.
These products have attracted billions of dollars in assets under management since their debut in October. The Invesco/Galaxy Bitcoin Spot ETF is expected to face less regulatory hurdles than the futures ETFs, as it does not involve derivatives or leverage. The ETF also complies with the Investment Company Act of 1940, which sets standards for mutual funds and other investment companies.
The Invesco/Galaxy Bitcoin Spot ETF is a milestone for the crypto industry, as it marks the first time that US investors can access bitcoin through a spot ETF. The ETF could also pave the way for more innovation and adoption of crypto assets in the mainstream financial system.
VanEck has resubmitted Spot Bitcoin ETF request to the U.S. SEC for consideration
VanEck, a leading investment management firm, has announced that it has filed a new application for a spot Bitcoin ETF with the U.S. Securities and Exchange Commission (SEC). The firm had previously withdrawn its previous proposal in September 2023, after facing several delays and rejections from the regulator.
A spot Bitcoin ETF is a type of exchange-traded fund that tracks the price of Bitcoin directly, rather than through derivatives or trusts. This means that investors can gain exposure to the cryptocurrency without having to buy, store, or secure it themselves. A spot Bitcoin ETF would also provide more transparency, liquidity, and efficiency to the Bitcoin market, as well as lower fees and risks for investors.
VanEck is not the only firm that is pursuing a spot Bitcoin ETF in the U.S. Several other companies, such as Valkyrie, WisdomTree, and NYDIG, have also submitted similar applications to the SEC, hoping to be the first to launch such a product in the country. However, none of them have received approval yet, as the SEC has been cautious and skeptical about the potential benefits and risks of Bitcoin ETFs.
The SEC has expressed concerns about the volatility, manipulation, fraud, and cybersecurity issues that may affect the Bitcoin market and harm investors. The regulator has also stated that it needs to see more progress in the regulation and surveillance of the cryptocurrency industry before it can approve a spot Bitcoin ETF. The SEC has set a deadline of February 14, 2022, to make a decision on VanEck’s latest application.
VanEck is confident that it can address the SEC’s concerns and demonstrate that a spot Bitcoin ETF is consistent with the public interest and the protection of investors. The firm has argued that Bitcoin is a legitimate asset class that deserves to be accessible to mainstream investors. VanEck has also pointed out that several other countries, such as Canada, Brazil, and Germany, have already approved and launched spot Bitcoin ETFs, without any major issues or negative impacts.
However, a spot Bitcoin ETF is also a controversial and elusive product in the U.S. market. Despite the growing demand and interest from investors, the SEC has not approved any spot Bitcoin ETFs yet, citing various concerns and challenges. In this blog post, we will explain why Bitcoin ETFs are controversial and what are the main obstacles and opportunities for their approval.
What are the benefits of a spot Bitcoin ETF?
Some of the main benefits are:
Transparency: A spot Bitcoin ETF would reflect the actual price of Bitcoin in the market, without any premiums or discounts that may occur in other products that use derivatives or trusts. A spot Bitcoin ETF would also disclose its holdings and operations regularly, ensuring that investors have accurate and timely information about their investment.
Liquidity: A spot Bitcoin ETF would trade on a regulated and established exchange, such as the New York Stock Exchange or Nasdaq, where investors can buy and sell shares easily and quickly. A spot Bitcoin ETF would also have a large and diverse pool of buyers and sellers, reducing the risk of price slippage or illiquidity.
Efficiency: A spot Bitcoin ETF would eliminate the need for investors to deal with the complexities and costs of buying, storing, and securing Bitcoin themselves. Investors would not have to worry about setting up a wallet, finding a reputable exchange, paying transaction fees, or protecting their private keys from hackers or loss. A spot Bitcoin ETF would also simplify the tax reporting and compliance process for investors.
Lower fees and risks: A spot Bitcoin ETF would charge lower fees than other products that use derivatives or trusts, such as futures contracts or Grayscale’s Bitcoin Trust (GBTC). These products often have higher management fees, trading fees, or premiums that erode the returns of investors. A spot Bitcoin ETF would also reduce the counterparty risk and operational risk that may arise from dealing with intermediaries or third parties.
What are the challenges of a spot Bitcoin ETF?
Despite the potential benefits of a spot Bitcoin ETF, the SEC has been reluctant and hesitant to approve such a product in the U.S. market. The regulator has expressed several concerns and challenges that may affect the viability and suitability of a spot Bitcoin ETF. Some of the main challenges are:
Volatility: The SEC has stated that the Bitcoin market is highly volatile and unpredictable, which may pose significant risks to investors. The price of Bitcoin can fluctuate dramatically in a short period of time, due to factors such as supply and demand, news events, market sentiment, technical issues, or manipulation. The SEC has also noted that the volatility of Bitcoin may affect the liquidity and valuation of a spot Bitcoin ETF, making it difficult for investors to trade or redeem their shares.
Manipulation: The SEC has argued that the Bitcoin market is susceptible to manipulation and fraud, which may harm investors. The regulator has pointed out that the Bitcoin market is largely unregulated and decentralized, with no central authority or oversight. The SEC has also highlighted that there are many instances of hacking, theft, or misconduct in the cryptocurrency industry, such as the Mt. Gox scandal, the Bitfinex hack, or the Bitconnect scheme. The SEC has claimed that it needs to see more progress in the regulation and surveillance of the Bitcoin market before it can approve a spot Bitcoin ETF.
Cybersecurity: The SEC has raised concerns about the cybersecurity issues that may affect the Bitcoin market and a spot Bitcoin ETF. The regulator has stated that there are many technical challenges and risks involved in storing and transferring Bitcoin securely, such as hacking, phishing, malware, or human error. The SEC has also questioned whether a spot Bitcoin ETF can ensure the safety and custody of its assets, as well as prevent unauthorized access or loss.
What are the opportunities for a spot Bitcoin ETF.
Despite the challenges and obstacles that a spot Bitcoin ETF faces in the U.S. market, there are also some opportunities and developments that may increase its chances of approval. Some of the main opportunities are:
Innovation: The SEC has acknowledged that it is open to innovation and new products that may benefit investors and markets. The regulator has stated that it is willing to engage with applicants and stakeholders who can address its concerns and demonstrate that a spot Bitcoin ETF is consistent with the public interest and the protection of investors. The SEC has also indicated that it is monitoring the evolution and growth of the cryptocurrency industry, as well as learning from other jurisdictions that have approved or launched spot Bitcoin ETFs.
Demand: The SEC has recognized that there is a strong and growing demand for Bitcoin and cryptocurrency products from investors, especially from institutional and accredited investors. The regulator has noted that investors are seeking more exposure and diversification to the digital asset space, as well as more choices and alternatives to access the market. The SEC has also observed that investors are increasingly using other products that use derivatives or trusts, such as futures contracts or GBTC, which may have higher fees and risks than a spot Bitcoin ETF.
Competition: The SEC has admitted that it is aware of the competition and pressure from other countries that have approved or launched spot Bitcoin ETFs, such as Canada, Brazil, or Germany. The regulator has stated that it is interested in understanding the experiences and outcomes of these jurisdictions, as well as the implications and consequences for the U.S. market. The SEC has also suggested that it may consider the global context and standards when evaluating a spot Bitcoin ETF application.
VanEck, a leading investment management firm, has filed a new application for a spot Bitcoin ETF with the U.S. SEC, hoping to be the first to launch such a product in the country. A spot Bitcoin ETF is a type of exchange-traded fund that tracks the price of Bitcoin directly, rather than through derivatives or trusts. A spot Bitcoin ETF would offer several benefits to investors, such as transparency, liquidity, efficiency, lower fees and risks. However, a spot Bitcoin ETF is also a controversial and elusive product in the U.S. market, facing several challenges and concerns from the SEC, such as volatility, manipulation, cybersecurity.
Despite these challenges, there are also some opportunities and developments that may increase the chances of approval for a spot Bitcoin ETF, such as innovation, demand, competition. The SEC has set a deadline of February 14, 2022, to make a decision on VanEck’s latest application.
If VanEck succeeds in obtaining the SEC’s approval for its spot Bitcoin ETF, it would be a historic milestone for the Bitcoin industry and the broader crypto space. It would also open the door for more innovation and adoption of digital assets in the U.S. market. However, if VanEck fails again, it would be another setback for the Bitcoin ETF hopefuls and a sign of continued regulatory uncertainty and resistance.