Anticipating Day One: What to Expect from Bitcoin ETFs

• Approval of Spot Bitcoin ETFs in the U.S.
• Trading Begins
• The Impact of Bitcoin ETFs
• Liquidity Pools
• Partnerships and Investments
• Gradual Interest Increase

Approval of Spot Bitcoin ETFs in the U.S.

Spot Bitcoin$42,260 -0.64% ETFs received approval in the U.S. after a decade-long struggle. The Securities and Exchange Commission gave the go-ahead on Wednesday afternoon, leading to an anticipated debut of these products on U.S. markets operated by the NYSE, Cboe Global Markets, and Nasdaq, backed by key trading firms planning to offer liquidity.

Trading Begins

Trading could potentially commence as early as 4 a.m. ET (09:00 UTC) with the launch of U.S. stock exchanges. This timing precedes the well-known daily opening ceremonies held 5 ½ hours later.

The Impact of Bitcoin ETFs

The new products allow practically any retail customer to gain exposure to bitcoin's (BTC) price via their conventional brokerage apps and accounts. Additionally, these ETFs permit traditional financial institutions to invest without having to rely on crypto exchanges.

Cynthia Lo Bessette, head of digital asset management at Fidelity, one of the bitcoin ETF issuers, stated that these ETFs provide investors interested in digital assets with more options. As opposed to the Bitcoin futures ETFs approved in the U.S. in 2021, which invested in derivatives and not the digital asset itself, the latest products offer a more direct approach.

By the same token, a spokesperson for Cboe Global Markets asserted that the ETFs provide investors with a transparent and regulated means to track Bitcoin's price, marking a significant advancement in establishing crypto as a tradable asset class and paving the way for new trading opportunities.

Liquidity Pools

With 11 spot Bitcoin ETFs funds on offer - some of which have already secured billions of dollars of assets leading up to the launch - liquidity providers and market makers have spent the previous months readying for this day. Their goal is to ensure the Bitcoin market remains efficient in the face of this new wave of interest.

Douglas Yones, NYSE Head of Exchange Traded Products, highlighted that Bitcoin's spot market, Bitcoin's futures markets, and the Bitcoin futures ETFs will all contribute to the spot ETFs' liquidity on the opening day. NYSE also has several liquidity programs in place.

Partnerships and Investments

BlackRock's head of digital assets, Robert Mitchnick, disclosed that the asset manager would utilize its partnership with Coinbase. Previously, in 2021, the company incorporated Coinbase Prime with its own portfolio management tool, Aladdin. While specific details of BlackRock's assets under management for its Bitcoin ETF at launch were not disclosed, the company did reveal a $100,000 seed investment.

Gradual Interest Increase

David Mann, Franklin$0.0015 -3.24% Templeton's head of ETF products and capital markets, conjectured that the influx could be more gradual than anticipated despite the initial excitement. He suggested that potential investors might take some time to review and get comfortable with the Bitcoin ETF vehicle.

Similarly, BlackRock's Mitchnick emphasized that it would be a long journey post-launch for investors. He mentioned wealth advisors as a potential significant investment channel for the ETF. However, as they have not had substantial exposure to investment vehicles containing Bitcoin, it would require an education journey before they may allocate funds.

Edited by Jonathan Stoker