Bitcoin experienced a surge, surpassing $49,000, marking its highest point since December 2021. This spike coincided with the commencement of trading for the first US exchange-traded funds (ETFs) directly investing in the cryptocurrency.
The US Securities and Exchange Commission’s approval of spot Bitcoin ETFs fueled the momentum.
In the initial 45 minutes of trading, over $1.4 billion was exchanged across all 11 ETFs. Notably, the Grayscale Bitcoin Trust recorded $634 million in transactions.
Big companies are getting more interested in the cryptocurrency market, which is a good sign for the upcoming year, according to Chris Newhouse, a DeFi analyst at Cumberland Labs.
But, there’s a challenge. The SEC (Securities and Exchange Commission) has been resistant to approving Bitcoin ETFs in the past. The SEC’s leader, Gary Gensler, has criticized the crypto industry, especially after issues like the 2022 market drop and the FTX exchange bankruptcy.
Even though the SEC lost a legal battle with Grayscale Investments last year, there’s still uncertainty about approving spot ETFs. Grayscale Bitcoin Trust, with about $29 billion in assets, became an ETF successfully.
For financial advisors, the approval of spot Bitcoin ETFs is a big deal. Some may still be cautious about suggesting it to clients, but having a regulated product could lead to more people getting interested in investing in cryptocurrencies, says Sui Chung, CEO of CF Benchmarks.
Bitcoin is doing well, but stocks of companies related to crypto had mixed reactions. Companies like MicroStrategy stayed stable, but others like Marathon Digital and Riot Platforms didn’t do as well. Coinbase Global faced a 1.65% decline.
The introduction of spot Bitcoin ETFs is a major change in the market. It shows that big institutions are getting more involved, and it could change how people see cryptocurrencies in the coming year.
