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Bitcoin ETFs: Traditional Investors’ $10 Billion Bet

Bitcoin ETFs: Traditional Investors’ $10 Billion Bet

As of Tuesday, the price of Bitcoin has risen to $69,018 from $44,000 at the start of the year, pushing up the cost of other significant cryptocurrencies like ether and Solana.

The spike is explained by a rise in interest in spot bitcoin exchange-traded funds (ETFs), which offer a less hazardous way to enter the cryptocurrency market. Because bitcoin is an uncorrelated asset, it attracts investors and is a desirable option for portfolio diversification.

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In contrast to conventional ETFs that use futures contracts as their underlying assets, spot bitcoin ETFs provide direct exposure to bitcoin without requiring actual ownership.

Bitcoin ETFs Rise, Drawing Investors to the Spot

Tuesday saw a remarkable increase in trading volume for Bitcoin exchange-traded funds (ETFs), with a total of $10 billion transacted.

At the same time as this spike, the price of Bitcoin reached a new all-time high and then saw a decline. Eric Balchunas, a Bloomberg ETF analyst, quickly drew attention to this milestone, highlighting the remarkable accomplishment—especially given that these ETFs are still just two months old.

Among the top ten Bitcoin ETFs, Blackrock’s Ishares Bitcoin Trust (IBIT) stands out as it has amassed more than $11 billion in assets under management (AUM) and more than 170,000 bitcoins since its founding.

This demonstrates investors’ trust in Blackrock’s product and positions IBIT as a powerful player in the quickly changing world of cryptocurrency investments.

The US Securities and Exchange Commission (SEC)’s (January) approval of spot Bitcoin ETFs is directly responsible for the spike in trading volume and AUM. As per Bloomberg estimates, investors have invested an incredible $7.35 billion into the eleven distinct funds that have been accessible since then.

The fact that well-known institutional investors like Fidelity Investments and BlackRock are selling spot Bitcoin ETFs suggests that traditional financial markets are beginning to accept cryptocurrencies.

The market cap of bitcoin is currently $1.3 trillion.
The market cap of bitcoin is currently $1.3 trillion. TradingView.com chart

Change in Market Sentiment

Beyond the statistics, this increase indicates a more general change in the market attitude and a greater interest in Bitcoin as a reliable investment option.

Bitwise Asset Management’s CIO, Matt Hougan, explains the increasing demand for Bitcoin ETFs. He highlights the industry’s involvement of hedge funds, individual investors, and registered investment advisors. An increasingly broad spectrum of investors seems drawn to Bitcoin as an asset class.

Market forecasts are generally optimistic. Veteran trader Peter Brandt increased his price goal for the current Bitcoin bull market to $200,000. There are opposing views, though. JPMorgan, recognized for taking a more conservative approach, believes that the next Bitcoin halving will cause the price of BTC to fall to $42,000.

These conflicting projections highlight the inherent turbulence and uncertainty in the cryptocurrency space, advising investors to proceed cautiously when dealing with these assets.

Institutional investments attracted by the SEC’s approval of spot Bitcoin ETFs have facilitated record-breaking trading volumes. The institutional support of big names in finance, such as Fidelity and BlackRock, adds even more credibility to cryptocurrencies.

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