There have always been barriers between traditional investments and the crypto market: traditional investors refuse to enter the crypto market because of the high volatility of the crypto market; but crypto investors are unwilling to tolerate the slow growth of traditional investment returns.

On July 16, BlackRock, Fidelity, Vaneck, WisdomTree, Invesco and other institutions submitted Bitcoin spot ETF applications to the U.S. Securities and Exchange Commission (SEC); on July 17, the SEC officially confirmed Received the Bitcoin ETF application from the above-mentioned institution; on July 19, the US SEC will begin to review whether to approve or reject the listing applications of the six Bitcoin spot ETFs included. The review period can be up to 240 days. Since the beginning of this year, eight large financial institutions, including BlackRock, have submitted applications for Bitcoin spot ETFs to the U.S. SEC.

What is a Bitcoin spot ETF and what does it mean if it passes SEC review? veDAO Research Institute will provide an interpretation of Bitcoin spot ETF in this article.

Bitcoin Spot ETF

What is ETF

ETFs refer to exchange traded funds, which sell shares to investors on the open market and use the proceeds to build a portfolio of assets based on market indexes, stock market sectors, or other asset classes. Launched in 1993, ETFs have gained popularity as a way for ordinary retail investors to invest in a basket of assets at once. ETFs are similar to mutual funds. However, unlike mutual funds, ETFs trade directly on stock exchanges like any other stock.

What is a Bitcoin Spot ETF?

The Bitcoin Spot ETF is a newcomer to the space, investing primarily in assets related to the original cryptocurrency Bitcoin. A Bitcoin spot ETF allows investors to gain exposure to BTC’s alluring potential without directly owning or safely storing it. This allows investors to gain exposure to Bitcoin price fluctuations without actually holding the cryptocurrency. The Bitcoin Spot ETF follows the price of Bitcoin, allowing investors to buy and sell fund shares on regular exchanges. This makes it easier for both ordinary and institutional investors to participate in cryptocurrencies. The Bitcoin Spot ETF will therefore be a game changer, bringing investment opportunities in the controversial digital asset class within its traditional context by bringing it closer to the traditional financial world through its emerging decentralized alternative.

Advantages of Bitcoin Spot ETFs

Simplified Investment Process: The Bitcoin Spot ETF provides investors with a worry-free and regulated BTC investment option without having to deal with the complexities of holding and maintaining the digital currency.

Diversification: Bitcoin spot ETFs allow investors to diversify their portfolios. By increasing exposure to Bitcoin, which has historically had a low correlation to traditional asset classes like stocks and bonds, investors can reduce overall portfolio risk and increase potential returns.

Professional Management: The Bitcoin Spot ETF is managed by professional investment firms with expertise in portfolio management and risk mitigation. These firms conduct research, monitor market trends and make informed decisions on behalf of investors, potentially optimizing returns and managing risk.

Regulatory Compliance: The Bitcoin Spot ETF operates within a regulatory framework, providing investors with the protection and oversight that may be lacking in unregulated cryptocurrency markets. Compliance with regulatory requirements provides investors with greater confidence and assurance.

Cost-Effectiveness: Investing in Bitcoin spot ETFs is more cost-effective than purchasing and storing BTC directly. ETFs typically have lower transaction costs, management fees, and operating expenses, making them an attractive option for cost-conscious investors.

The impact of Bitcoin spot ETFs on the market

To put it simply, once the Bitcoin spot ETF is approved, it means that the market will introduce trillions of funds into the market. This is a huge benefit for Bitcoin at present. A Bitcoin spot ETF is expected to increase the cryptocurrency’s liquidity. Second, incorporating Bitcoin into such a large financial market helps increase its popularity and exposure.

For most conservative investors today, cryptocurrencies remain an unknown option, both a risky bet and a curious novelty. A Bitcoin spot ETF is expected to bring the mainstream credibility and acceptance of Bitcoin investing to a new level, further increasing the overall credibility and acceptance of the cryptocurrency. The SEC’s approval of a Bitcoin spot ETF would represent new recognition in the mainstream market and, more importantly, enable institutional investors to more easily take positions.

If the Bitcoin spot ETF is implemented, more and more people will be willing to understand Bitcoin, including its basic operation methods and trading models, which will promote the globalization of Bitcoin. At the same time, due to decentralization, these digital assets face greater security risks, and purchasing Bitcoin spot ETFs does not require direct currency holding, so that investors do not have to worry about the safety of their assets, which also greatly lowers the threshold for participation, without prior understanding. You can start participating immediately.

Once the Bitcoin spot ETF is officially listed in the United States, it will become a milestone event in the global blockchain field. The U.S. regulatory authorities have legally recognized the legal status of Bitcoin as a financial product, and the United States will have greater influence on the price of Bitcoin. big.

Conclusion

The launch of the Bitcoin ETF is a major step forward in the development of the cryptocurrency industry. While legal barriers currently remain in place, the entry of major players such as BlackRock into the market is a sign that traditional financial institutions are becoming more open to digital assets. If a Bitcoin exchange-traded fund is approved, Bitcoin could become more accessible to the general public, institutional investors could be lured in, and the entire cryptocurrency industry could reach full maturity.

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