What the market looks like after the approval of Bitcoin ETFs in the US; Is it worth investing?

On Wednesday, the 10th, the Securities and Exchange Commission of the United States market, known as the Securities and Exchange Commission (SEC), gave the green light for the trading of a batch of products, including spot Bitcoin ETFs.

The expectation is that ETFs will help to further popularize Bitcoin and other cryptocurrencies, which until recently were associated with financial crimes and had almost no space in economic news. From now on, with With the approval of the US regulator, there could be a boost for the crypto industryenabling institutional and retail investors to access the segment within the rules of traditional finance.

+Bitcoin ETFs approved in the US in boost for cryptocurrencies

With approval, the expectation is that more than US$100 billion from institutional investors can be directed to the cryptoactive market. The wait for the launch of ETFs was one of the main drivers for bitcoin's 160% surge last year.

Yesterday, the 11th, more than US$4 billion of a newly approved investment product linked to Bitcoin changed hands on the first day of trading.

Eleven of the products offered, known as exchange-traded funds, or ETFs, began trading on popular platforms like Nasdaq after federal regulators gave them the go-ahead, creating a simpler way for investors to bet on cryptocurrency markets. Large financial firms, including asset managers like BlackRock and Fidelity, are offering ETFs.

What changes with the approval of Bitcoin ETFs?

For Frankfurt School of Finance and Management professor Phillip Sandner, Bitcoin is now packaged in a classic title.

“It has a great signaling effect. Bitcoin has always been criticized. This decision may now make one or two points of criticism disappear,” said Sandner, in an interview with DW.

Also according to DW, several asset managers have sought approval to launch Bitcoin ETFs since 2013. However, the SEC, which corresponds to the Securities and Exchange Commission in Brazil, had been rejecting them until then, claiming that the products are vulnerable to market manipulation. Furthermore, cryptocurrencies were seen as opportunities to circumvent sanctions and move and launder criminal money.

In the opinion of the founder and CEO of DUX — a startup that operates in the investment segment —, Luiz Octávio Gonçalves Neto, what effectively changes is that there are now regulated vehicles where investors of all types can expose themselves to Bitcoin.

“Through ETFs, which are already known means, these investors have much more regulatory and tax clarity, simplicity of custody and monitoring of their investments in the asset”, he indicates.

Still according to Neto, the approval of ETFs tends to bring a substantial volume of capital in the medium/long term, enabling pension funds, companies, family offices and other investors to be exposed to the asset easily and safely. Therefore, the tendency is for this to have a positive effect on Bitcoin over the months and years, but does not necessarily reflect a substantial appreciation in the short term.

Asked whether Brazilian investors will have access to Bitcoin ETFs, Neto explains that Brazilians have already been able to expose themselves to Bitcoin through ETFs since 2021, starting with Hashdex's HASH11.

“In fact, Brazil already has a Bitcoin ETF long before the USA – demonstrating our capacity for innovation and the quality of companies and entrepreneurs here. Hashdex, which also had its ETF approved in the USA, created the first ETF in sight here in Brazil. Brazilians can also expose themselves to US ETFs through international brokers”, he states.

What are Spot Bitcoin ETFs?

As Neto explains,m ETF (exchange traded fund) works like a share that has its variation based on some index. In the case of Bitcoin, the value of these shares follows the appreciation or devaluation of Bitcoin itself.

“A Bitcoin spot ETF means that the managers that make this asset available have to have Bitcoins in custody to back all the shares traded”, explains the expert.

Will Bitcoin price rise?

Some analysts argue that the flow of investments into Bitcoin should now be significantly greater. British bank Standard Chartered estimates that Bitcoin ETFs could attract between $50 billion and $100 billion in investor money by 2024 alone.

The accountant, cryptocurrency expert and founder of Escola de Cripto, Mychel Mendes, goes in the same direction of thought. He says, however, that Bitcoin is a limited asset and that demand, and consequently its price, should rise.

“Probably [vai subir] yes, because Bitcoin is a limited asset, there are 21 million, and with the ETF there is a very large demand for it”, he says.

On Thursday the 11th, shortly after the markets opened, bitcoin soared to US$49,000, its highest level since December 26, 2021, but soon began to fall until it returned to the level of US$46,000. Also for Mendes, investing in Bitcoin ETFs means investing resources in an institutional product that may have Bitcoin in the basket. Therefore, in his opinion, the investment can be profitable or not, like any financial product.