The world’s largest asset manager, BlackRock, has confirmed that its application for a spot Bitcoin ETF is still pending approval from the US Securities and Exchange Commission (SEC). The company filed the application in July, seeking to offer investors exposure to the actual Bitcoin cryptocurrency, rather than futures contracts or other derivatives.
This statement from BlackRock is in regard to the recent article published by Cointelegraph which claimed that the U.S. Securities and Exchange Commission (SEC) had approved the first Bitcoin Spot ETF, issued by iShares. The article, which was quickly deleted, sparked a wave of excitement and confusion among cryptocurrency investors, who rushed to buy Bitcoin in anticipation of a price surge.
However, the article turned out to be fake news, as the SEC has not made any official announcement regarding the approval of any Bitcoin ETF. The false report caused many users to FOMO (fear of missing out) and lose money, as they bought Bitcoin at a high price and then saw it drop shortly after. This incident highlights the importance of verifying the sources and credibility of any news related to cryptocurrency regulation, as well as the risks of acting on emotions rather than rational analysis.
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A spot Bitcoin ETF would allow investors to buy and sell shares of a fund that holds Bitcoin as its underlying asset, without having to deal with the technical and security challenges of owning and storing the digital currency directly. This would potentially lower the barriers to entry and increase the liquidity and transparency of the Bitcoin market.
However, the SEC has been reluctant to approve any Bitcoin ETFs, citing concerns over market manipulation, fraud, custody, and investor protection. The regulator has repeatedly delayed or rejected applications from various firms, including VanEck, Valkyrie, and Wisdom Tree. The SEC has also indicated that it prefers Bitcoin futures ETFs over spot ones, as futures are regulated by the Commodity Futures Trading Commission (CFTC) and trade on established exchanges.
BlackRock’s application for a spot Bitcoin ETF is one of the few remaining ones that have not been withdrawn or denied by the SEC. The company’s CEO, Larry Fink, has expressed optimism about the prospects of a Bitcoin ETF, saying that he believes there is a “huge appetite” for crypto among investors. He also said that BlackRock is “very excited” about the potential of blockchain technology and digital assets.
BlackRock is not new to the crypto space, as it already offers some exposure to Bitcoin through its Global Allocation Fund and Digital Assets Fund. The company also holds a stake in MicroStrategy, a business intelligence firm that has become one of the largest corporate holders of Bitcoin. Additionally, BlackRock has hired several experts in crypto and blockchain, such as Rick Rieder, its chief investment officer of global fixed income, and Michael Saylor, its head of digital assets.
According to data from Bybt, more than $50 million worth of Bitcoin short positions were liquidated in less than an hour, as the leading cryptocurrency surged. A spot ETF would also increase the demand and liquidity for Bitcoin, as more institutional and retail investors would have access to the market. A spot ETF would also reduce the premium or discount that often occurs on existing Bitcoin products, such as the Grayscale Bitcoin Trust (GBTC) or the Bitcoin futures contracts.
However, the tweet was based on a misunderstanding of a press release by BlackRock, which announced that it had launched two new funds that would invest in Bitcoin futures, not spot. BlackRock already had exposure to Bitcoin futures through its existing funds, and the new funds were not ETFs, but mutual funds.
The SEC has not approved any spot ETF for Bitcoin or any other cryptocurrency, and has repeatedly expressed its concerns about the market manipulation, fraud, and volatility in the crypto space. The SEC has also delayed its decision on several pending applications for Bitcoin futures ETFs, which are considered more likely to be approved than spot ETFs.
Despite the clarification that the rumor was false, the Bitcoin price did not drop back to its previous levels, but rather consolidated around $27,000/28k. This suggests that the market was already bullish on Bitcoin, and that the rumor was just a catalyst for a breakout.
Some analysts also pointed out that the liquidation of short positions added fuel to the rally, as traders who bet against Bitcoin had to buy back their positions at higher prices to cover their losses. This created a positive feedback loop that pushed the price higher.
The false rumor about BlackRock’s spot ETF approval shows how sensitive and reactive the Bitcoin market is to any news or speculation about institutional adoption and regulation. While a spot ETF would be a major milestone for Bitcoin, it is not a necessary condition for its growth and development.
Bitcoin has already shown its resilience and innovation in the face of regulatory uncertainty and hostility and has attracted many prominent investors and corporations to its network. Bitcoin also has a strong community and culture that supports its vision and values, regardless of external factors.
While BlackRock awaits the SEC’s decision on its spot Bitcoin ETF application, several Bitcoin futures ETFs have already launched in the US market, attracting billions of dollars in inflows. These include the ProShares Bitcoin Strategy ETF (BITO), the Valkyrie Bitcoin Strategy ETF (BTF), and the VanEck Bitcoin Strategy ETF (XBTF). However, some analysts have warned that these products may not accurately reflect the price of Bitcoin, as they are subject to contango and roll costs.
A spot Bitcoin ETF would be a more direct and efficient way to invest in Bitcoin, as it would track the actual price of the cryptocurrency and eliminate the need for intermediaries. However, it remains unclear whether the SEC will ever approve such a product, or what conditions it would impose on it. BlackRock’s application is still under review by the regulator, and no timeline has been given for its approval or rejection.