The formal trading of Bitcoin exchange-traded funds (ETFs) on the US stock market has dramatically increased the price of Bitcoin, indicating a potential trigger for both short- and long-term gains.
According to Bloomberg, following the start of trading for Bitcoin spot ETFs, the price of Bitcoin suddenly increased, exceeding $49,000 for the first time since December 2021.
While the rising momentum may temporarily subside, it remains a good indicator for Bitcoin in the immediate term. Other cryptocurrencies, such as Ethereum, Cardano, and Polkadot, are also viewed positively.
All 11 Bitcoin ETFs are presently actively trading, with an early increase in market value topping $2.6 billion in the first few hours.
“The approval will generate positive feelings in the short and long run, but in the near term, we must wait and watch. Expectations for Bitcoin ETFs have already been included into cryptocurrency pricing. As a result, the market is still waiting to see if the classic ‘buy the rumor, sell the news’ scenario will play out,” said Jaime Baeza, Co-Founder and Managing Partner of cryptocurrency hedge fund AnB Investments.
Shares of cryptocurrency-related firms are declining on the stock market, with Marathon Digital and Riot Platforms both down 12%, and Coinbase Global down 5.1%.
Prior to the introduction of Bitcoin spot ETFs on January 10th, the US Securities and Exchange Commission (SEC) has blocked this investment route for almost a decade. SEC Chairman Gary Gensler has criticized the whole cryptocurrency business, claiming that it is plagued with fraud and wrongdoing. In 2022, the SEC tightened down on numerous types of digital assets, particularly following the failure of Sam Bankman-Fried’s FTX exchange.
However, last year, the SEC suffered a huge judicial loss in a critical court dispute with asset management firm Grayscale Investments.
“ETFs certainly represent a watershed moment for financial planners. They may not aggressively promote it to clients, but it is currently accessible as a managed product. This might lead to much more consistent interest and inflows into this asset class,” said Sui Chung, CEO of CF Benchmarks (which provides index data for some authorized ETFs).
