01/11/2024 – 20:38
The American Securities and Exchange Commission (SEC) facilitates the purchase of cryptocurrency by allowing it to be traded directly on the stock exchange, through so-called ETFs. Bitcoin fans have been waiting for the decision for weeks, hoping and causing the cryptocurrency's price to rise even further. more. Now it's official: so-called Bitcoin spot ETFs can now be offered in the US.
“This means that Bitcoin is now packaged in a classic security,” says Philipp Sandner of the Frankfurt School of Finance and Management. “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.
Several asset managers have sought approval to launch Bitcoin ETFs since 2013. However, the Securities and Exchange Commission (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. Additionally, many see cryptocurrencies as opportunities to circumvent sanctions and move and launder criminal money.
Hacking without consequences
Even more surprising is that the SEC has not pumped the brakes. This is because one day before the announcement, a hack showed once again how vulnerable Bitcoin's price is and affected the SEC itself.
On Tuesday (09/01), after the market closed, the exchange supervisory authority in the US wrote on the short messaging service X that the Bitcoin ETF had been approved. The price then rose like an arrow. But the euphoria quickly faded: the news was fake. The SEC's account on X (formerly Twitter) had been hacked.
The invasion was confirmed by platform X. An unknown person allegedly gained control of a phone number associated with the user's account through a third party. The SEC deleted the post about 30 minutes after it was published and said it was working with law enforcement and government agencies to investigate the incident. It is quite possible that the hackers were trying to profit from the price rise triggered by the news.
ETF makes buying Bitcoin easier
With the approval of Bitcoin ETFs, trading this cryptocurrency in the US becomes easier. ETF stands for Exchange-Traded-Fund – translated as “exchange-traded fund” – also called index fund. ETFs are also used to replicate stock indices such as the German DAX. Investors can now benefit or not from the price increase through shares in these investments.
Bitcoins could already be traded in the US – but only in accounts on specially designed crypto exchanges or privately in so-called digital wallets. When purchasing through cryptocurrency brokers, Bitcoins can be held in these brokers. If these are hacked – which has happened repeatedly – the Bitcoins could also be lost. Secure storage on private wallets is significantly more complex and requires more technical knowledge.
“With a Bitcoin ETF, normal stock portfolios would have access to Bitcoin trading without the need to open a separate account with a crypto broker,” explains Jochen Stanzl of broker CMC Markets. “Many expect Wall Street negotiations to permanently increase demand for Bitcoin.”
According to expert Philipp Sandner from the Frankfurt School of Finance and Management, a Bitcoin ETF simplifies purchasing, especially for fund managers and financial advisors, who can more easily include Bitcoins in their portfolio.
Such products already exist in Europe and Switzerland. But they are new in the USA. “The American capital market has an important and large appeal,” said Sandner.
Will Bitcoin Value Explode?
Experts assume that the expectation of a green light from the SEC could already be factored into the price of Bitcoin in the short term. Bitcoin gained a lot of value in the last few months leading up to the decision.
But analysts also assume that significantly more money will now flow into the area. British bank Standard Chartered estimates that Bitcoin ETFs could attract between $50 billion and $100 billion in investor money this year alone. This would possibly increase the price of Bitcoin to $100,000. Other analysts, however, assume that inflows could approach around $55 billion over a five-year period.
For Bitcoin fans, the year 2024 is definitely off to a good start. Philipp Sandner is also convinced that the approval of the ETF is a big step towards the recognition of digital currency.
“It would only be even bigger if a central bank also acquired Bitcoin”, he explains.
But security never really existed for Bitcoin. The price rose several times in a very short period of time and then fell sharply again. Many investors lost a lot of money. When it comes to Bitcoin, even more than with a normal investment in shares, you need to be aware of the risk of such an investment.
#approval #Bitcoin #ETF
