- BlackRock’s Bitcoin ETF approval signaled a new era for cryptocurrency investment options.
- Increased liquidity from Bitcoin ETFs could drive investment into memecoins and NFTs.
As a seasoned researcher with over two decades of experience in the financial markets, I find the recent approval of BlackRock’s Bitcoin ETF by the SEC as a significant turning point in the evolution of cryptocurrency investment options. My personal journey in this field has allowed me to witness the rise and fall of various trends, but none have been as transformative as this one.
Lately, there’s been a lot of focus on the U.S. Securities and Exchange Commission (SEC) granting approval for BlackRock to list and trade options for their Bitcoin [BTC] ETF known as IBIT.
On September 20th, the SEC expedited their decision, allowing the globe’s largest asset manager to proceed with the listing of these investment options after giving their approval.
Obtaining approval enabled BlackRock’s Bitcoin trading options on Nasdaq ISE, LLC, representing a significant milestone in their digital currency ventures. This move opened a fresh era for investment opportunities in the cryptocurrency market.
Exec’s nuanced view
In a recent conversation on X thread, Joshua Lim, co-founder of Arbelos Markets, offered his perspective on why BlackRock’s Bitcoin ETF is considered the leading option among others.
Lim pointed out several key factors that make Blackrock’s BTC ETF the best bet in the current market.
He said,
By nature, Bitcoin is a digitally-born asset, which makes it simpler to convert into financial transactions and transfer for trade settlements compared to traditional commodities. The introduction of IBIT and other ETFs has accelerated its circulation, making previously immobilized Bitcoin accessible for active trading.
In other words, Lim underscored the point that increasing the practice of lending dollars using Bitcoin as collateral by prime brokers would significantly increase the liquidity or cash flow within the cryptocurrency market.
This enhanced liquidity, it’s proposed, might be channeled towards more risky areas within the system. In this scenario, funds could shift from traditional bitcoin ETFs to ventures like meme tokens and non-fungible tokens (NFTs), which are considered speculative assets.
Lim anticipates that this change might encourage more funding towards these non-traditional investments, thereby transforming the broader cryptocurrency scene.
He also added,
Translating that into a simpler, more natural language: “The availability of options markets on IBIT and market-makers who are willing to take on risk can help determine the risk in margin lending against IBIT, making it more probable for prime brokers to lend against cryptocurrencies. This could potentially lead to an increase in less popular cryptocurrencies (altcoins) becoming more widely available.
Its impact
Given the circumstances, it’s logical to wonder: What impact will this approval have on the path of the world’s leading cryptocurrency?
To which the ETF Store President Nate Geraci replied,
As I was eagerly awaiting the approval process, I found myself sharing Eric Balchunas’ conviction at Bloomberg – a strong belief that we were on the right track with our proposed ETF.
In response to Blackrock’s significant shift, companies such as Grayscale and Bitwise are considering listing and trading options for their Bitcoin ETFs directly tied to the cryptocurrency. This action is a continuation of the trend set by the SEC’s approval of 11 Bitcoin ETFs in January.
As the enthusiasm escalates, Jeff Park, the lead of alpha strategies at Bitwise, presented an alternative perspective on the matter.
The situation could become quite chaotic, potentially leading traditional markets to close. However, what sets Bitcoin apart is its inherent property of having a resilient, decentralized market that cannot be shut down, unlike GameStop (GME). This characteristic, as you might expect, will only intensify the current turmoil.
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2024-09-25 16:08