Bitcoin is a digital currency that exists only in the digital realm; it is like internet money. In the financial world, Bitcoin is a game-changer. It offers a new way to store and transfer value.
Unlike traditional money, Bitcoin is not tied to any country, making it a global currency. However, a Bitcoin ETF is something different; it is an Exchange-Traded Fund or a basket that holds Bitcoin.
It allows regular folks, like your parents, to invest in Bitcoin without actually buying and storing it themselves. It makes investing in Bitcoin easier and safer for many people who might find dealing with digital wallets and private keys a bit confusing. Now, let’s get to the exciting part. We’re going to explore how the approval of a Bitcoin ETF could change things in the world of Bitcoin.
Understanding Bitcoin ETFs
Think of ETFs as a way to buy a piece of something big, like a slice of a pizza. Bitcoin ETFs are like slices of Bitcoin that you can buy on the stock market. There are different types, but the spot-based ones follow the current price of Bitcoin. However, future-based ETFs will depend on Bitcoin’s future price. Till now, no Bitcoin ETF has been issued in any part of the world. However, Blackrock filed for the first ETF; let’s see what will happen.
The Regulatory Landscape Regarding Bitcoin ETF
When it comes to Bitcoin ETFs, there are rules to make sure everything is above board. However, there are no rules, and the SEC needs to fix this first before approving Bitcoin ETFs. The good news is that such news will create an inflow in the crypto world.
Big investors, like banks and companies, also invest more in Bitcoin for hedging. If they start buying Bitcoin through ETFs, they could make $100k easily. Do not forget that Bitcoin halving is pending in April 2024, so it will make the coin scarcer. You can check out our BTC prediction before investing. It will help you to get a detailed technical & fundamental view.
Possible Scenarios of Bitcoin ETF Approval and Its Impact on BTC
Let’s look into the possible scenarios of three different futures for Bitcoin after the ETF approval:
Scenario 1: Spot ETF Approval Leads to a Significant Bitcoin Rally
In this scenario, Bitcoin takes off like a rocket. Lots of people and big investors rush to buy Bitcoin through ETFs, driving the price sky-high.
Scenario 2: Spot ETF Approval Has a Limited Impact on Bitcoin Prices
Here, the ETF approval does not cause a huge stir. Some people use ETFs to buy Bitcoin, but it does not change the game too much. Investors may start to sell BTC after the news.
Scenario 3: Spot ETF Approval Triggers a Short-Term Rally Followed by a Correction
In this scenario, there is excitement at first, and Bitcoin’s price shoots up. But then, it will settle down a bit and face a big drop. However, will it be approved? Let’s see what experts are thinking:
Insights from Cryptocurrency Experts and Analysts
Some smart people who really understand cryptocurrencies have some interesting things to say. Crypto Rover on X thinks that if a big company called BlackRock gets permission to do something special with Bitcoin, its price could go up a lot. But is it possible? Here are the reasons:
- BlackRock is famous for getting permission to do things like this.
- Back in 2008, the U.S. government asked BlackRock for help. This shows that they trust BlackRock a lot.
- BlackRock already made something like a special Bitcoin fund for big investors.
- These special Bitcoin funds, called ETFs, are already working in Europe and Canada.
The approval of a Bitcoin ETF could be a game-changer for Bitcoin and traditional investors. It could make investing in Bitcoin easier, attract more people to the world of cryptocurrencies, and boost Bitcoin’s price.