Bitcoin’s journey to mainstream finance has reached another major milestone-and another record price.
Cryptocurrencies traded at $ 66,975 (£ 48,456) after the exchange-traded fund (ETF) launched in the United States. This has dramatically increased Bitcoin’s investor exposure. Commenced on October 19, this resource allows investors to infer the unborn worth of Bitcoin without genuinely retaining it. This is the first- time investors have been qualified to switch Bitcoin-related means on the New York Stock Exchange. There was a lot of media attention and fiscal request hype before that.
Bitcoin’s Change in Trade
It started trading at $40 (£29) per share. Additionally, its assets rose 5% to approximately $570 million (£412 million), making it the second-largest new ETF to trade. It is the world’s largest asset manager. And the effect it had on the price of Bitcoin was staggering. It has soared from an all-time high of $64,895 to a new all-time high of $66,975, hovering around $65,000 at the time of writing. This is a big change compared to mid-July 2021, when Bitcoin hit its 2021 low of less than $30,000, reflecting the massive volatility.
Many financial institutions have previously tried to get Bitcoin ETF approval but failed. Until now, the U.S. Securities and Exchange Commission (SEC) (the U.S. government agency that protects investors) has been reluctant to approve. This was partly due to Bitcoin’s high volatility and widespread concerns about the unregulated cryptocurrency industry. However, Securities and Exchange Commission Chairman Gary Gensler said the Commission would be more comfortable with forward-looking ETFs because they trade in regulated markets. This is a significant change in the direction of the SEC and occurred after the Gensler takeover in April 2021.
ETFs trade like common stock, are regulated and can be traded by anyone with a brokerage account. Dubbed the ProShares Bitcoin Strategy ETF (or BITO for short), this new fund is the first to introduce the highs and lows of Bitcoin’s value to mainstream investors without going through the complex process of buying a coin. While U.S. investors can buy Bitcoin futures directly on unregulated exchanges such as the Chicago Mercantile Exchange and BitMEX, which already regulates (Bitcoin directly from unregulated exchanges), the ETF launch will Open the market to investors. Increases awareness of Bitcoin in financial markets.
Banking Blockbuster
Although recent reports indicate that Bitcoin appears to be declining, some are skeptical of Bitcoin because of its link to criminal activity. And Jamie Dimon, CEO of investment bank JP Morgan, argues that Bitcoin is worthless and that regulators will regulate the hell out of it. (However, JP Morgan granted asset management clients accessed to crypto funds in July 2021.)
Eric Balchunas, the chief analyst at Bloomberg, is not surprised by the price hike, saying the ETF launch is a blockbuster, high-profile, home-based debut that brings a lot of legitimacy and interest to the cryptocurrency market. But how will BITO affect the cryptocurrency space? As a new product, more investors are facing the ups and downs of Bitcoin’s value in a regulated market. Many of them must have felt the inconvenience of buying cryptocurrencies on unregulated exchanges and storing their assets independently.
Other investment funds interested in cryptocurrencies will undoubtedly seek to list their own ETFs. With exposure to Bitcoin and competitors, BITO’s success fuels it. Several other ETF providers, including Invesco, VanEck, Valkyrie, and Galaxy Digital, are likely to launch Bitcoin ETFs in the days after ProShares debuts. This development makes investing in cryptocurrencies more accessible and extensive. This is also an important stepping stone for their adoption into the financial mainstream.
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