Bitcoin ETFs Approved: What Should We Expect on Day One?

Spot bitcoin ETFs have finally managed to get approval from the US after a challenging decade. The next step: Getting them traded.

Following the green light from the US Securities and Exchange Commission (SEC), the highly anticipated products will be launched on US markets managed by the NYSE, Cboe Global Markets and Nasdaq with the help of major trading firms that plan to provide liquidity.

The products will allow virtually any individual customer to gain exposure to the price of bitcoin (BTC) using traditional brokers and accounts, as well as invest without the need to go through the crypto exchanges of traditional financial institutions.

Cynthia Lo Bessette, head of digital asset management at Fidelity, one of the bitcoin ETF issuers, says ETFs give investors interested in digital assets more choice. They differ from bitcoin futures ETFs, which were approved in the US in 2021 and invest in derivatives of the digital asset, not the digital asset itself.

"We have long believed that a spot-priced exchange-traded product would be an effective way for investors to gain exposure to bitcoin," says Cynthia Lo. "As a firm, we are committed to meeting the growing demand by providing investors with tools that support their choices and facilitate safe access to markets."

Similarly, a spokesperson for Cboe Global Markets says ETFs will provide investors with a "transparent and regulated" way to track bitcoin's price. "The approval represents a major step forward in positioning crypto as a tradable asset class and opens up new trading opportunities."

Liquidity pools

With the launch of 11 spot bitcoin ETF funds, some already covering billions of dollars in assets, liquidity providers and market makers believe the new hype is fruitful. Douglas Yones, Head of Exchange Traded Products at NYSE, says day one bitcoin futures markets and bitcoin futures ETFs will help with the liquidity of spot ETFs. He also adds that NYSE has a number of liquidity programs.

"We have a very nice price discovery process that can be unlocked on the New York Stock Exchange, so we expect a very dynamic and liquid market."

Robert Mitchnick, BlackRock's head of digital assets, told CoinDesk in an interview that the asset manager will leverage its partnership with Coinbase. The company integrated Coinbase Prime with its own portfolio management tool Aladdin in 2021. While he did not specify where BlackRock ranks in terms of assets under management at launch for its bitcoin ETF, he said the company has already received a seed investment of $100,000.

"There was already a seed investment by BlackRock in the ETF. One of the things to keep in mind here is that we have a long process ahead of us."