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SEC Approves Bitcoin Spot ETFs

There's already $2.5 billion in Bitcoin ETF trading

Author

Gannon Breslin
January 11, 2024

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What a wild week in web3 and crypto it has been!

First off, I would like to personally thank everyone who participated in the raffle this past week. Winners dis******[email protected] and o*****[email protected] have been notified!

Here is the breakdown of today's newsletter:

🚀 SEC Approves Bitcoin Spot ETF (after some drama)
💧 What’s Dropping

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SEC Approves Bitcoin Spot ETFs ✅

After much drama, numerous Bitcoin Spot ETFs have officially been approved by the SEC 🎉

The SEC approved 11 applications - notably from major players such as BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck.

💡 What is an ETF?

ETFs or "exchange-traded funds" are exactly as the name implies: funds that trade on exchanges, generally tracking a specific index. When you invest in an ETF, you get a bundle of assets you can buy and sell during market hours—potentially lowering your risk and exposure, while helping to diversify your portfolio. Source: Schwab.com

💡 What is a Spot Bitcoin ETF?

“Spot bitcoin ETF” is just the official name for an ETF that holds bitcoin. The performance of these ETFs should follow bitcoin prices closely, minus fees and the fund's trading costs. A spot price is the immediately available price of a security. Futures prices, on the other hand, represent prices at a future date.

Warning: Now let’s not forget, by buying a Bitcoin Spot ETF you are NOT owning the Bitcoin itself. The fund itself owns the Bitcoin and you own a share of the fund that reflects the performance of the underlying asset (Bitcoin price). If you want to own Bitcoin yourself you have to purchase it and as always, not your keys = not your crypto.

Like any massive news event, the price action of Bitcoin has been all over the place. Early this morning it flew up to $49,100 USD a coin but now since has dropped back down to $46,000. Overall the currency has an excellent 12.76% performance this month.

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Before we get into this list keep in mind this is NOT financial advice but purely opinions!

💡 Here’s the bullish outlook:

  • In 2022 there were 7,393 mutual funds in the United States with a reported $26.96 Trillion asset value

  • Over $40 million U.S. households have some sort of Traditional or ROTH IRA

  • Pension funds, 401ks, and countless other investment vehicles hold trillions of dollars worth of mutual funds and ETFs

  • These Bitcoin Spot ETFs are now allowed to be purchased/held inside not only your personal brokerage account or IRA but also by mutual fund and ETF managers

TL,DR:

Customers want to hold Bitcoin → Mutual funds buy Spot ETFs to satisfy customer needs → Bitcoin Spot ETFs buy and hold Bitcoin → Bitcoin price moves upward due to supply and demand

As you can see things are already off to a roaring start

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  • VanEck is seeding its ETF with $72.5M, a 7.2x increase from original plans. (@Capital15C)

  • BlackRock slashes ETF fees to .25%, from original .3%. (WG)

  • SEC Chairman Gary Gensler writes a thread for investors to remember when investing in crypto. (@GaryGensler)

  • Someone sent $1.2M to Satoshi’s genesis wallet. (TB)

  • Logan Paul to commit $2.3M to buy back crypto zoo NFTs (M)

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That's all for today's issue! Thanks for reading this far and also make sure to give our Twitter a follow daily for breaking web3 news! (@TheDropNFT)

Written by: Gannon Breslin

Disclaimer: The Drop DOES NOT provide financial advice. All content is for informational purposes only. The Drop is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any crypto-related asset is extremely risky and could result in significant capital losses.