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Bitcoin ETF Could Fail: Impact on Bitcoin and Other Altcoins
(Article content) Cryptocurrencies have performed well this year, with Bitcoin, Litecoin, Ethereum and Bitcoin Cash in particular posting double-digit gains. In comparison, traditional assets such as stocks and commodities have not performed as well. One reason for the strong performance of cryptocurrencies in the last 30 days was the hope for the launch of a Bitcoin ETF. BlackRock, the world's largest asset manager, became the first company to file for a spot ETF in June. Shortly afterwards, other companies in the financial services industry such as Invesco, WisdomTree and Ark Invest also submitted their applications for ETFs. In contrast to previous applications, these...
Bitcoin ETF Could Fail: Impact on Bitcoin and Other Altcoins
(article content)
Cryptocurrencies have performed well this year, with Bitcoin, Litecoin, Ethereum and Bitcoin Cash in particular posting double-digit gains. In comparison, traditional assets such as stocks and commodities have not performed as well. One reason for the strong performance of cryptocurrencies in the last 30 days was the hope for the launch of a Bitcoin ETF.
BlackRock, the world's largest asset manager, became the first company to file for a spot ETF in June. Shortly afterwards, other companies in the financial services industry such as Invesco, WisdomTree and Ark Invest also submitted their applications for ETFs. Unlike previous filings, these filings introduced a monitoring clause for the exchange-traded fund.
Although it is still too early to say whether the Securities and Exchange Commission (SEC) will approve these funds, there are already skeptical voices. The SEC has rejected similar requests in the past and SEC Chairman Gary Gensler has already expressed doubts. Additionally, the SEC has been sued by the parent company of the Grayscale Bitcoin Trust in the US over its rejection of firms with licenses to operate regulated ETFs.
Nevertheless, there is also the possibility that the trust could fail even if the ETFs are given the green light. Analysts at JP Morgan have warned that existing Bitcoin ETFs have seen little interest from investors and have not registered any inflows from gold ETFs.
The SEC's rejection of the Bitcoin Spot ETF would also impact other altcoins such as Litecoin, Ethereum and Bitcoin Cash. The probability that they would receive their own ETFs would then be almost zero. If the Bitcoin Spot ETF is rejected and Grayscale loses in court, the positive price development of the cryptocurrencies could be reversed.
Institutional investors currently have limited options for gaining access to Bitcoin. Some invest in the Grayscale Bitcoin Trust or the ProShares Bitcoin Strategy ETF, while others invest in spot ETFs listed on exchanges in Canada and Europe. However, these funds have not seen large inflows so far. The ProShares Bitcoin Strategy ETF recently surpassed $1 billion in assets, while the Grayscale Bitcoin Trust has $19 billion in assets.
The cryptocurrency markets are therefore facing a potentially crucial phase in which the SEC's approval or rejection of Bitcoin ETFs could have a significant impact on the price development of the cryptocurrencies. Investors and market observers are curious to see how the situation will develop.