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Depending on your point of view, you may think that the first ever day of trading of US Bitcoin exchange-traded funds (ETFs) last week will go down in the annals of financial markets history. Alternatively, you might consider that it was just the latest marker among many to come that cryptocurrencies, tokenization, digital assets and the like are swiftly becoming the transformative force of digital finance that are reshaping forever the way we perceive and engage with traditional banking systems.
An article by Jeffrey Hartjes and Richie MacTaggart
But, as we know, the world is not black and white - and here at 21X, we see that it is a little of both. So, let’s rewind a little first to explain what all the fuss was about.
Following approval by the Securities and Exchange Commission (SEC) just 24 hours previously, the 11th of January saw the first-ever day of trading of US Bitcoin exchange-traded funds (ETFs) that track Bitcoin. And though a spot Bitcoin ETF had already received regulatory approval in the EU in 2023, to date the only provider that currently has a Bitcoin product structured as an ETF in Europe is London-based asset manager, Jacobi.
So, while the SEC’s approval was not the first, it is highly significant from a market size perspective. Proving the point, a total of $4.6 billion of ETFs changed hands on their first trading day. According to data platform, ETFbook, only $9 billion in total is currently held by crypto exchange-traded products (ETPs) listed in Europe - and trading is just a fraction of this figure.
Strictly speaking, these 11 ETFs will allow new investors to get into Bitcoin trading without taking the extra steps involved in buying actual Bitcoin through opening a digital wallet or crypto trading platform. However, the end result is the same - greater exposure for cryptocurrency and increased trading volumes. Whether this translates into a higher price for Bitcoin is yet to be seen, but with Standard Chartered forecasting $50-100 billion of funds being put into Bitcoin ETFs in 2024 alone, the odds are in its favor.
So, the answer is yes - last week did register a historic day for Bitcoin, which had spent 10 years pursuing ETF regulatory approval. But, as we indicated earlier, this type of event - signs of the acceptance and growth of digital asset trading - will be coming thick and fast over the course of 2024. Our hoped-for approval in the coming months of 21X as an ESMA-licensed, blockchain-based exchange under the EU DLT (Distributed Ledger Technology) regulation - DLTR - will be just one of these.
Whatever 2024 holds for the digital asset world, for us last week’s first trading of SEC-regulated Bitcoin ETFs was both the start of something big, but also a mere milestone along the road to full digitization of capital markets.
So, what do you think? Was it the day that regulated Bitcoin trading came of age or a case of the finance industry navel-gazing while the rest of the world gets on with more important things? Do let us know with a response to this post on our Socials.