The US financial regulator, the Securities and Exchange Commission, has approved 11 spot bitcoin exchange-traded funds.

Nigel Green, CEO deVere Group

SEC approval could skyrocket long-term BTC prices – 5 reasons why

This approval by the financial regulator of the world’s largest economy is a landmark moment for Bitcoin and the wider crypto market and boosts prices in the long-term, even if there is a sell-off in the near-term.

There are five main reasons to be bullish for the long-term price trajectory following the SEC approval.

Institutional validation

The approval of Bitcoin ETFs represents a resounding institutional validation of the cryptocurrency, marking a departure from its initial reputation as a speculative and volatile asset.

Institutional investors have long been cautious about entering the crypto space due to concerns about regulatory uncertainties and market integrity.

The introduction of SEC-regulated Bitcoin ETFs addresses these concerns by providing a transparent and secure investment vehicle, paving the way for institutional capital to flow into the market.

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By GlobalData

Likely influx of capital

One of the primary catalysts for the anticipated surge in Bitcoin prices is the massive influx of capital that is expected to follow the approval of ETFs.

These investment vehicles provide a convenient and regulated avenue for both retail and institutional investors to gain exposure to Bitcoin without the complexities of managing private keys or navigating unregulated exchanges. 

As traditional investors seek diversification and higher returns, Bitcoin ETFs offer an attractive option, potentially unlocking billions of dollars in new investments.

Accessibility and liquidity

Bitcoin ETFs help democratise access to the cryptocurrency market, allowing a broader range of investors to participate.

Increased accessibility is likely to contribute to higher liquidity in the Bitcoin market, reducing price volatility and enhancing the overall stability of the cryptocurrency.

Market integration and regulatory clarity

The approval of Bitcoin ETFs represents another significant step towards the integration of cryptocurrencies into the mainstream global financial system.

Regulatory clarity surrounding these investment vehicles provides a framework for market participants to operate within established rules, promoting a more secure and transparent environment. 

As regulatory uncertainties dissipate, more and more institutional and individual investors can confidently engage with the crypto market, further reinforcing the legitimacy of Bitcoin.

Increased global adoption

Bitcoin ETFs aren’t limited by geographical boundaries, offering a globally accessible investment vehicle for investors across jurisdictions. This global reach is expected to drive widespread adoption and recognition of Bitcoin as a legitimate asset class.

As more countries embrace the idea of regulated Bitcoin ETFs, the cryptocurrency will likely gain further acceptance on the international stage, attracting a broader investor base and propelling prices to potentially new heights.

The approval of Bitcoin ETFs is a watershed moment for Bitcoin and the entire crypto market. 

Marcelo Sampaio, co-founder, CEO of Hashdex

Today’s announcement marks the next phase for the industry by allowing US investors to fully participate in the promise of Bitcoin. With reinvigorated enthusiasm from wealth managers, institutions and individual investors in holding an asset that acts as a decentralised store of value across macroeconomic conditions, the arrival of a spot Bitcoin ETF in the US could not have come at a better time. We are excited to offer this innovative and regulated product in coordination with Tidal as we further accelerate our mission of empowering individuals and institutions to securely engage with this exciting and revolutionary asset class.

Samir Kerbage, CIO at Hashdex

Bitcoin’s time has arrived, and Hashdex and Tidal are proud to offer the Hashdex Bitcoin ETF at this pivotal moment in history. The conversion of DEFI is the next step in our firm’s six-year history of delivering regulated crypto investment products to professional investors across the globe, helping them understand the investment case for this asset class and its impact to portfolios while enabling them to participate in the digital assets ecosystem in a safe, secure and regulated manner. With our extensive experience as a crypto-focused firm running spot Bitcoin ETFs in multiple regions, we are thrilled to work alongside Tidal to deliver one of the first products that provides US investors with direct exposure to Bitcoin.

Mike Venuto, CIO and co-founder, Tidal

The Hashdex Bitcoin ETF has been custom-built to offer investor protections that are unavailable when trading Bitcoin directly in unregulated markets. Given Hashdex’s extensive experience of successfully providing investors with industry-first products solely focused on digital assets, they are the ideal partner as we continue to work together to deliver innovative investment solutions that will further accelerate investor exposure to Bitcoin and increase adoption across the US.

Philippe Bekhazi, founder & CEO at XBTO Global 

This is undoubtedly a significant moment for the industry, but given the pressure the SEC has faced from the courts and the US House Financial Services Committee, it was only a matter of time before a spot bitcoin ETF application finally got the green light. Additionally, the SEC’s recent meetings with interested parties and the subsequent edits to the active applications may indicate that the regulatory body is changing tact from rejecting to reforming the digital asset space. Whatever the case, it looks like the SEC and US may finally be skating towards where the puck is headed. 

This approval will, for the first time, open up new possibilities for a number of sovereign, pension funds, IRAs and 401k as well as other institutions who, before this point, may not have had access to digital asset investment opportunities. Whether we will see bitcoin usage massively peak immediately remains to be seen, but this is definitely a big step forward for the institutional adoption of crypto.

Stephen Richardson, MD, Financial Markets, Fireblocks

The introduction of the spot Bitcoin ETF puts much needed wind in the digital assets industry’s sails, providing both retail and institutional investors with exposure to this asset class without the complexity of acquiring the underlying asset, and making digital assets more accessible for mainstream investors. There has long been a push and pull over natively digital assets being viable forms of investment, so this nod of approval by financial regulators will pave the way for increased awareness of, and investment in, this asset class more widely.

I think the SEC has always wanted digital assets to operate under the auspices of trusted and regulated financial institutions, especially if the asset class grew exponentially. An example is Fidelity who launched its digital assets arm in October 2018 to provide digital asset brokerage services to their retail customers, including offering exposure to crypto via retirement accounts. However, I believe the approval of the spot bitcoin ETF will likely have little to no impact on the SEC doubling down on DeFi and centralised exchanges whom they believe are not complying with existing securities laws.

Jeff Billingham, Director of Strategy Initiatives, Chainalysis

The approval of Bitcoin ETFs marks a pivotal moment, ushering in a regulated avenue for institutional participation — from independent broker dealers to bank wealth divisions and RIAs — in the crypto asset class. 

The long-term impact of spot Bitcoin ETFs extends beyond immediate price action. Their approval is a turning point for a rapidly maturing, institutional crypto market. These regulated avenues provide access for investors of all sizes and will foster a more secure market over the next three, five, and ten years.

These ETFs will introduce a stabilising influence to a historically volatile crypto market and encourage the development of vigorous risk management and trade infrastructure on par with other mature asset classes.

At Chainalysis, our focus remains on building trust in blockchains, and that extends to blockchain-based financial products like spot Bitcoin ETFs, and we’re excited to assist businesses and financial institutions in navigating this new landscape with confidence.

Bradley Duke, Chief Strategy Officer, ETC Group

The approval of the US spot Bitcoin ETFs by the SEC and also the Hong Kong Securities Commission announcement that it too will approve spot Bitcoin ETFs, goes far to legitimise Bitcoin as an investable global asset. Here in Europe, we have had secure and efficient spot Bitcoin ETPs for over 3.5 years, and we are spoiled for choice with the range of physically-backed Crypto ETPs available, including many different single-asset Crypto ETPs as well as broad market index products.

Michael Silberberg, Head of Investor Relations at Alt Tab Capital

With Blackrock, Fidelity, Franklin, and Galaxy amongst the parties seeking BTC Spot ETF licenses, and further partnerships from JP Morgan and Goldman leaked recently, it is no surprise that the SEC has moved forward with what is industry consensus and granted these long-delayed licenses.

In the short term, we expect continued frothy price accumulation on this news as capital flows into the market from a new class of institutional buyers to crypto looking to hedge with BTC, make these products part of their treasury management, and invest in the future of money itself.

If we look for an analogy, Gold jumped approximately 250% four months after its first ETF approval and launched an 8-year bull run.

Even as we welcome these vehicles to the market, it’s important to remind investors of all classes that these vehicles will come with restrictions such as cash-only creation/redemption and liquidity tied to market hours.

Jean-Baptiste Graftieaux, CEO of Bitstamp

The SEC’s approval of Bitcoin ETF is a significant milestone for the crypto industry, providing a well-known entry point to the world of cryptocurrency for those who have been observing from a distance. With this approval, exchanges have a responsibility to supply market surveillance data to ETF providers, helping to instil confidence in mainstream audiences looking to invest in crypto.

With a spot ETF being first listed in Europe in 2023, the industry will benefit from a more global, cohesive regulatory approach, with the potential for more digital assets to step into the ETF spotlight.

However, the sector must collaborate effectively to guarantee that crypto ETFs are equipped with the necessary safeguards to prevent fraud, market manipulation and ultimately, protect investors.