Although the price of Bitcoin and cryptocurrency has exploded over the last decade, there are still a few decisions that could cause it to cross over into popular culture and mainstream investment completely.
Some of the world’s biggest investment companies have some stake in Bitcoin, which is slowly becoming more intertwined with finance. It’s still a far cry from full adoption, though.
One thing that has been cited as a key negative is that there need to be certified and industry-recognized products where you can invest as a retail trader. One such example is an ETF. These products help bridge the gap for many investors uncomfortable using cryptocurrency exchanges.
Cryptocurrency has begun to impact other industries like iGaming, where you can explore legitimate platforms offering fast withdrawals, low transaction fees, and esports csgo betting with crypto. With smooth user interfaces and a wide variety of games, iGaming platforms utilize digital currencies to deliver the most seamless digital entertainment experience.
Nevertheless, it still needs to make that full crossover.
What Is An ETF?
Exchange-traded funds (ETFs) are a specific tool used by investors that allows them access to the stock exchange. Often referred to as indices, common ETFs are offered in markets that track large markets like the S&P 500 or the Dow Jones Industrial Average.
The nature of this instrument is to assess the index’s overall return, allowing investors to invest indirectly in a product without having to own it or deal with it on an exchange directly.
It can help provide a managed risk to a combination of assets, and they operate across a range of foreign currency markets, commodities and stocks. Other benefits of ETFs include tax efficiency when weighed up against mutual funds.
Why Is A Bitcoin Spot ETF So Important?
One of the main things holding back the mass adoption of Bitcoin is that not enough people understand how to invest and the risks involved.
Rightly so, people do not invest in products they do not understand, this is wise, and it is also good advice for anybody looking to invest in any asset. However, you shouldn’t get involved if you need to learn how it works. Knowledge is vital.
A Bitcoin spot ETF is important because it would provide a necessary bridge for huge retail and institutional investment to purchase the cryptocurrency in a more conventional manner.
With this assurance and a level of security in such a volatile asset, it could see tens of billions of dollars flow into Bitcoin. The SEC has refused proposals by several companies to offer a spot ETF in the USA. However, many Bitcoin futures ETFs have been approved.
Futures contracts are a specific type of leveraged trading often used by professional investors to amplify any investment they have in the market. A spot ETF would genuinely send the price of Bitcoin spiralling upward.
Will We See A Bitcoin Spot ETF In 2023?
It’s difficult to say whether a Bitcoin spot ETF will get approval. However, the bull run of 2021 saw huge visibility for Bitcoin on a grand scale. This ranged from El Salvador accepting it as legal tender to the market cap heading into the trillion-dollar region.
Approving a Bitcoin spot ETF would send the price on a similar journey. However, the SEC started 2023 by aiming at cryptocurrency.
Gary Gensler, the head of the SEC, has commented recently that he will be taking a closer look at regulations in the cryptocurrency space. He has already aimed at exchanges that provide staking, causing concern for more prominent exchanges.
This is ambiguous regarding a Bitcoin spot ETF as regulation could finally pave the way for one to be approved. However, it could also be the catalyst which causes retail investors to move away from cryptocurrency and take the volume out of the market, thus rendering a spot ETF redundant.
Given that we didn’t see a Bitcoin spot ETF come to fruition during the boom of 2021 or the slump of 2022, we will have to play it by ear and see whether Gensler decides to be more friendly to Bitcoin.
If he continues to tackle the industry head-on with a series of legal disputes and court cases, it will be a bumpy year ahead.
The cryptocurrency industry is on the precipice of a significant fork in the road. Cryptocurrency has operated loosely around legislation, and there have been multiple calls to regulate it properly.
Many have said that the regulation should be carefully managed so that it doesn’t push companies that innovate and specialize in cryptocurrency and blockchain technology away from the United States.
Some massive institutions own Bitcoin. For example, it is on Tesla’s balance sheet, one of the biggest companies in the world. You also have investment behemoths like BlackRock, who have Bitcoin and other cryptocurrencies on their multi-trillion-dollar balance sheet.
One thing is true, though. If we see a Bitcoin spot ETF approved and we manage to steer clear of a total bear market, the price of Bitcoin will take off again, and it could even kickstart a new bull run.