The cryptocurrency market came alive this past week following a series of applications to the Securities and Exchange Commission (SEC) for new crypto on-ramps. While none of them have been approved yet, the interest from investors of all sizes drove the market to its highest rate of growth since July 2022.
The excitement began on June 16 when the largest investment firm in the world – BlackRock – filed an application with the SEC for a spot bitcoin ETF. Called iShares Bitcoin Trust, market experts are giving the new proposal a high chance of being approved. BlackRock’s record in having its applications approved through the SEC is 575 and 1. This would be a very big change from previous SEC behavior which has rejected every single application for crypto-related securities so far.
Following BlackRock’s application, WisdomTree, Invesco/Galaxy, Valkyrie, and Ark Invest each filed their own applications for a spot bitcoin ETF. If approved, each of these will enable investors to tap into the investment potential of the cryptocurrency market without having to own cryptocurrency directly themselves.
In other words, bitcoin ETFs could become a method of accessing the crypto market – and advocates say it is a much easier method, which could explain why major corporations are getting behind the idea and driving the value of cryptocurrency up as a result. You don’t have to be tech savvy or know anything about digital wallets or “gas” fees. Investing in bitcoin (maybe other cryptocurrencies) could become as accessible as trading other assets.
Honestly, though, that doesn’t seem like much of a benefit… BitIRA customers are already familiar with just how easy crypto investment can be. But maybe the target of BlackRock’s offering isn’t the everyday American who wants a Digital IRA. Maybe BlackRock is targeting institutional investors who manage billions of dollars of assets, offering them a tool they understand to buy an asset they really don’t understand.
While the recent inflow into the cryptocurrency market has indeed been high at $199 million, it’s also worth noting that the preceding nine weeks have been marked by steady outflows. The past week’s inflow makes up for about half of what was lost during that time period, indicating the severity of the slump – which was contributed to in part by the SEC’s legal attacks on Coinbase and Binance, and the lack of regulatory direction leaving many uncertain what will happen with cryptocurrency in the U.S.
If the SEC approves the first U.S. based spot Bitcoin ETF, it will go a long way toward boosting the cryptomarket even further. It may even be the market-legitimizing push that big investors are waiting for before going all in on decentralizing their assets to protect themselves against ongoing inflation.
In the past, the SEC has refused to approve Bitcoin ETFs due to concerns about how the market can be manipulated, leading to the denial of all 33 applications previously filed. The first came in 2016 from Grayscale; it was finally rejected by the SEC in June of 2022 (leading to a lawsuit from Grayscale).
That doesn’t mean that the SEC is bound to reject Bitcoin spot ETFs forever. In fact, it approved four Bitcoin Futures ETFs, setting some precedent. On top of that, Bitcoin spot ETFs are alive and well in other parts of the world (with Canada launching the first in 2021). Lastly, given the pedigree of the companies that are filing for spot ETFs, there is more than one reason for optimism.
Aside from the SEC’s impending decision on Bitcoin ETFs, Congress is actively working on determining how the cryptocurrency market in the US should be regulated, with many lawmakers anticipating some kind of framework in place by the end of the year. Once Congress outlines operating parameters for the US cryptomarket, big investors will see that as justification for buying up their share.
As always with investments, those who get in early – before the big corporate adopters come in and drive up the price through the ceiling – are the ones who benefit the most. Securing what you can of cryptocurrency assets before the value goes up is the best way to take advantage of the activity we’re seeing in the market over the past few weeks. As more legitimacy (and adoption, and investment) comes to cryptocurrency, people who already invested in Digital IRAs are likely to be pleased.