The cryptocurrency Bitcoin has been with us for nearly 15 years, but now it could become a truly extraordinary financial asset. The blame lies in the approval of ETFs (“Exchange Traded Funds”), which are exchange-traded funds that were first approved by the U.S. Securities and Exchange Commission (SEC). We are facing a potentially major turning point for a segment that has so far been on the dark side of financial markets.

Gary Gensler gives way. The SEC chairman admitted that the decision was made due to the defeat in the judicial courts. This agency attempted to reject a request from investment firm Grayscale, which was creating an ETF based on Bitcoin. The SEC lost that appeal, which left them no choice but to approve nearly a dozen such proposals yesterday Wednesday, according to Gensler. This executive explained in his official statement that this is “the most sustainable path from now on.”

Bitcoin price over the last four years. Approval of ETFs is expected to continue the upward trend of recent months. Source: Reuters

But he does it reluctantly. Gensler also stated in this statement that, despite the official approval of these investment funds, “We do not approve or support Bitcoin.” According to this executive, the danger with cryptocurrency is clear:

“Investors should be wary of the numerous risks associated with Bitcoin and products whose value is linked to cryptocurrencies. Bitcoin is primarily a speculative and volatile asset and is also used for illegal activities such as ransomware, money laundering, sanctions evasion and terrorist financing. terrorism “.

They won’t open the door to more crypto (for now). The SEC also made clear that this decision is not a sign of possible approval of other financial products based on crypto assets. Bitcoin is an exception in this market, according to Gensler, and the remaining cryptocurrencies continue to be considered tradable financial assets and are subject to special regulations to protect investors.

Investing in Bitcoin is now like investing in Coca-Cola shares. However, for individual and institutional investors, the decision could have huge implications. Thanks to these Bitcoin-based ETFs, Bitcoin becomes comparable to stocks issued by traditional companies. Thus, investors can access Bitcoin-based funds as well as funds containing shares of all kinds of companies in their portfolios. They will no longer have to deal with cryptocurrency trading markets (exchanges) and will therefore have a much simpler and more direct mechanism for accessing such assets.

new gold. The approval of Bitcoin ETFs, as announced on Coindesk, has created great expectations about their potential growth in the coming months. This happened two decades ago with gold-backed ETFs, which transformed the market and dramatically increased the price of gold. More than $100 billion is currently invested in gold ETFs listed in the US, the world’s largest capital market. The price of gold quadrupled in the seven years following the approval of these ETFs in 2004.

Exaggerated predictions begin. And of course, this has led to a resurgence of all sorts of predictions about the impact this will have on the price of Bitcoin, which is currently around $46,000. Standard Chartered, a global financial institution, believes the price will reach $100,000 by the end of the year. It is impossible to know what will happen, but high expectations for the Bitcoin price have already led to exaggerated statements in the past. For example, let’s remember that John McAfee announced in 2017 that Bitcoin would reach $500,000 in 2020.

Collect profits? Bitcoin’s volatility is still very high, but one thing is certain: Ever since rumors began to emerge that the SEC would approve Bitcoin ETFs, the value of the cryptocurrency has not stopped growing. For example, it has increased by 60% since October. This is an argument for those who believe that Bitcoin will fall significantly: at CryptoQuant they guarantee that Bitcoin could fall to $32,000. The reason is this: Those who invest in 2023 can start bulk sales and make a profit just by waiting for the approval of ETFs.

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in Xataka | Bitcoin and other cryptocurrencies have been pretty quiet. A key regulation now signals the end of “crypto winter”