The decision has been made: shares of funds investing in Bitcoin will appear on the American stock exchange. The cryptocurrency should appreciate, unless investors implement the “buy the rumor, sell the fact” strategy.
After many years of efforts by finance industry companies, the US Securities and Exchange Commission (SEC) has decided to accept Bitcoin ETF applications from all 14 funds applying for their establishment. Each will be able to invest in this cryptocurrency in the regulated market, without the need to open an account and transfer money to firms operating private online exchanges.
“Listing such a fund will make access to cryptocurrencies very easy for many investors and many funds, which due to their investment policy could not invest in certain asset groups that do not have a regulated market,” says Michał Stajniak, XTB expert, in an interview with MarketNews24. “Listings on the regulated market will make, for example, pension funds buy bitcoin.”
The risk level associated with investing in Bitcoin should decrease, although the price of Bitcoin usually changes by at least several dozen percent within the year. The approval certificate represents a new level of acceptance, maturity, and civilization of the cryptocurrency market, providing the sector with greater credibility and potential for further innovation.
Bitcoin ETFs will facilitate access to the cryptocurrency market, increasing liquidity. While it is difficult to predict the scale of new participants and market dynamics, it is worth recalling that the introduction of ETFs on gold at the end of 2003 led to seven years of positive price changes.
“It is very likely that a similar situation will now occur with Bitcoin,” comments the XTB expert. “However, remember that over the past few weeks we have observed a very large rally in the cryptocurrency market; Bitcoin even rose above $ 47,000; thus, the ‘buy the rumor, sell the fact’ strategy was implemented, and such a rumor was the anticipated SEC decision. It is possible, therefore, that the market will decide to realize profits.”
Cryptocurrencies were anxiously waiting for the year 2024, also due to Bitcoin’s halving, which takes place every four years. What is the halving eagerly awaited by investors? This is a reduction in the supply of Bitcoin, which you receive for mining. Every four years the amount of Bitcoin received is halved. This is to prevent Bitcoin from being mined too quickly, stretching the process over time, and additionally, it is a process that is meant to cause an increase in the value of this cryptocurrency. The last three halvings brought spectacular increases in the value of the cryptocurrency. This is a situation that can be compared to changes in gold prices when its production decreases.
“Also remember that this demand for cryptocurrencies began when speculation abounded about cuts in interest rates by the Fed,” explains M. Stajniak from XTB. “These cuts will mean that deposits in dollars will no longer be so profitable and the search for other investment opportunities will increase. However, inflation growth and a stronger dollar would turn out to be unfavorable for Bitcoin.”
