Will the accolade come this year?

The Bitcoin ETF topic is picking up speed again in the USA. Even the largest crypto money managers Grayscale and Galaxy Digital are considering moving their Bitcoin deposits into an ETF. What is behind the new wave of ETF applications and what influence a Bitcoin ETF can have on the course.

Hardly a week goes by without a new Bitcoin ETF application being submitted to the American securities regulator, the SEC: The race for the top tier of exchange-traded funds has achieved a new dynamic. There are now over eight applications in the approval process. These include well-known candidates such as Fidelity Investments and VanEck.

Bitcoin ETF: An anachronism with price potential

Crypto enthusiasts may not understand the Bitcoin ETF effort. Finally, a more advanced medium, i.e. tokens on a blockchain, is exchanged for a documented security. This is not only more expensive than the direct purchase of Bitcoin, it is also partly associated with tax disadvantages and limited tradability. Nonetheless, the reservations of many investors towards tokens and wallets are so great that they prefer convenient booking into the securities account. Some institutional investors are also dependent on traditional securitisations. The trading volumes of securitized Bitcoin derivatives such as futures or certificates such as Bitcoin ETNs are correspondingly high.

But even if you do not count yourself among the group of investors who prefer a Bitcoin investment via the securities account or are dependent on it for regulatory reasons, there is good reason to look forward to Bitcoin ETF approval by the SEC. Ultimately, this would force many new investors into the market and catapult Bitcoin’s market capitalization upwards. At least that is the hope that originated in the first gold ETFs. After the first gold ETF was issued in 2003, gold ETFs have become very popular investment products. The largest American gold ETF alone (SPDR Gold Trust) has a market capitalization of nearly $ 60 billion.

Bitcoin ETF still in April?

The first Bitcoin ETF was applied for by the Winklevoss brothers back in 2013. It then became clear relatively quickly, however, that a Bitcoin ETF had no chance of approval at that time. Above all, the aspect that there is no regulated or easily controllable trade was a thorn in the side of the American supervisory authority. Now, eight years later, the Bitcoin ecosystem is no longer recognizable. Trustworthy intermediaries such as exchanges or custodians can now very well enable Bitcoin to be traded securely.

The fact that the SEC is now receiving a veritable flood of applications shows that Wall Street insiders now rate the chances as relatively high. Otherwise it would be difficult to explain that a lot of time and money flow into the exchange-traded index funds with Bitcoin underlyings. Nevertheless, it is hardly possible to give a reliable statement about the admission date and the successful candidate.

An assessment shared by many analysts comes from ETF expert Todd Rosenbluth. Across from CNBC appreciates that a Bitcoin ETF will be approved by the SEC within the next one to two years. He also assumes that several Bitcoin ETFs will be approved, so the authority doesn’t just select a lucky winner. The earliest possible Bitcoin ETF approval is April 29th. Then the SEC has to decide whether to approve or reject VanEck’s ETF application. However, it is also not unlikely that the SEC will further extend the filing period and thus postpone a final decision.

The pressure on the SEC is growing

The statements of SEC Commissioner Hester Peirce also suggest that it will not be long. So explained she told Forbes that it may not be in the regulator’s interest for investors to invest in unregulated products rather than an ETF. From a consumer protection perspective and in order to ultimately have control over Bitcoin stocks, there are some indications that the SEC does not want to wait long. After all, it is not in the interest of the state for investors to keep their private keys themselves.

In addition, the SEC is slowly running out of arguments to keep rejecting the applications. While it was easy in recent years to let the applications of crypto-entrepreneurs come to nothing, it is no longer the case with heavyweights like Fidelity Investments. The applicants are now powerful financial players who are extremely knowledgeable about regulatory issues and have formal and informal channels, in the sense of lobbying and networking, to assert their interests.

At the same time, Canada shows that it is already quite possible to approve a Bitcoin ETF with high standards. Canada already had its first Bitcoin ETF in February of this year authorized. This is traded on the Toronto Stock Exchange (TSX) and is in high demand. As the world’s most important financial center, the USA will certainly not watch long as Bitcoin ETFs come onto the market in other jurisdictions, which can look forward to billions in fresh capital.

And what about Europe?

Some people certainly ask themselves why there can’t be Bitcoin ETFs from Germany and the EU. In this country it is unfortunately forbidden to issue an ETF with only one commodity or base value. Accordingly, there is also no German or European gold ETF.

At this point there is a questionable regulation. For alleged consumer protection interests, diversification is prescribed for ETFs, which only leads to ETF substitutes such as bonds, ergo Bitcoin ETNs, being issued, which in turn have less consumer protection than ETFs. After all, these are regulated as bonds and thus show an issuer risk that Bitcoin ETFs do not have. Two German Bitcoin ETNs that are traded on the Deutsche Börse Xetra include the BTCetc (Bitcoin Exchange Traded Crypto) from the ETC Group and the Vectors Bitcoin ETN from VanEck.

What effect will an American Bitcoin ETF have on the price?

If Bitcoin ETFs are approved by the SEC, then it is quite realistic that they will total a double-digit US dollar billion amount in market capitalization within 12 months. The support for the Bitcoin course would be palpable, but not exorbitant either. The positive influence on the price is likely to be 10 percent rather than 100 percent. Even if crypto enthusiasts cannot gain much from a Bitcoin ETF, they can take on an important bridging function. Especially since possible Bitcoin bans, even if these are not to be expected in the USA, will become even more unrealistic. At the end of the day, the positive signal effect could not be less valuable than the immediate and effective inflow of funds into Bitcoin.