After a long pause, the Bitcoin ETF mania seems to have bounced back with the world’s largest asset manager BlackRock, applying with the U.S. Securities and Exchange Commission (SEC) for approval to launch its spot Bitcoin exchange-traded fund (ETF).
This development came just days after the U.S. Securities and Exchange Commission (SEC) took legal action against major exchanges Coinbase and Binance.US for allegedly offering unregistered securities.
A Bitcoin ETF (Exchange-Traded Fund) is a financial product that aims to expose investors to Bitcoin through traditional financial markets. It functions similarly to other ETFs but will focus on Bitcoin as the underlying asset. Investors can buy and sell shares of the Bitcoin ETF on stock exchanges, allowing them to gain indirect exposure to Bitcoin’s price movements without owning or managing the cryptocurrency directly. According to the filing, BlackRock’s so-called “iShares Bitcoin Trust” intends to collaborate with Coinbase Custody as its custodial partner in securely holding the Bitcoin that forms the foundation of the ETF.
Introducing a Bitcoin ETF is expected to attract a broader range of investors, particularly institutions, to the cryptocurrency market, with various metrics already showing all Bitcoin cohorts are off-distribution and entering light accumulation.
Recent market trends have echoed this sentiment. On Monday, June 9, crypto analytics firm Glassnode reported an increase in the holdings of Bitcoin entities with balances under 100 BTC, which include the so-called “shrimps” and “fish”. According to the firm, these entities absorbed the equivalent of 254% of the mined supply over the past month, approximately 2,286 BTC per day.
Moreover, in a separate tweet, Glassnode highlighted a decline in Bitcoin’s Highly Liquid Supply, reaching a cycle low of 2.94 million BTC, which reflects a decrease of 620,000 BTC since January 2022. Notably, a decrease in liquid supply implies that there is less Bitcoin available for trading overall. This reduction in the actively tradeable supply can influence the price of Bitcoin, as a decrease in supply relative to demand can potentially drive prices higher.
That said, whereas it’s too early to deduce what happens for Bitcoin’s price in the short term, experts have argued that the prospect of a Bitcoin ETF from BlackRock has the potential to fuel interest and investment in the cryptocurrencies further. Moreover, retail will likely follow institutions in buying Bitcoin to avoid missing out (FOMO), pouring a wall of money into Bitcoin, Ether, ADA and other crypto assets.
At press time, Bitcoin was trading at $26,644 after a strong close of last week’s candle. According to popular crypto analyst Michaël van de Poppe, BTC must hold atop the $26,000. “If that practically sustains, the odds of upwards continuation is significant,” he tweeted today.