"New Money Flows." What the possible approval of a bitcoin-ETF in the U.S. means

According to Bloomberg, the U.S. regulator next week may approve the country’s first exchange-traded fund based on bitcoin futures. Experts explained the likely consequences of such a decision
"New Money Flows." What the possible approval of a bitcoin-ETF in the U.S. means

On October 15, Bloomberg, citing its own sources, reported that the U.S. Securities and Exchange Commission (SEC) may approve the country’s first bitcoin-ETF next week. The exchange-traded fund, according to the agency, would be based on bitcoin futures. After that, the value of bitcoin for the first time since mid-April exceeded $60 thousand. Experts assessed how likely this scenario is and predicted what the crypto market will expect in case the SEC approves the first bitcoin-ETF in the United States.

The probability of approval is high

The SEC may well approve one of the bitcoin-ETF applications next week, according to CEX.IO Broker Head of Data Analysis Yuri Mazur. In his opinion, the country’s authorities will have to take this step, as it is no longer just a financial story for them, but also an image story. Mazur explained that after China’s total ban on cryptocurrencies, the United States became the main haven for digital assets and related companies.

“Cryptocurrencies hardly threaten the financial stability of the United States and the hegemony of the U.S. dollar”, the analyst added.

Mazur also recalled that bitcoin futures have been traded on the Chicago Mercantile Exchange (CME Group) in the United States since 2017. According to the expert, regulators had enough time to assess the risks of this instrument for investors and for the financial industry as a whole.

The CEO of the Swiss financial company Newcent Vladimir Smetanin agreed that the SEC is very likely to approve the first US bitcoin-ETF in the near future.

Investment inflow

If bitcoin-ETF is approved in the U.S., the next stage of recognition of the first cryptocurrency will begin, which will be an important signal to the market, Smetanin believes. According to him, an exchange-traded fund based on bitcoin futures will make it much easier for institutional investors to access the digital asset market.

If the first U.S. bitcoin-ETF is launched, the crypto market will see a flood of new institutional money, CEX.IO Broker’s head of data analysis explained. He explained that investors are now looking for various opportunities to invest in the cryptocurrency industry, such as buying shares of companies that hold bitcoin on their balance sheets.

“This is indirect and indirect investing, so a bitcoin-ETF, in our opinion, will probably be more in demand”, Mazur said.

Possible Risks

November could see a major capital outflow from digital assets, Currency.com cryptocurrency exchange analyst Mikhail Karkhalev predicted. According to him, this will happen if the U.S. Federal Reserve makes a decision to tighten monetary policy and starts winding down emergency stimulus programs.

“Against this background, capital from risky assets will partially move to the U.S. dollar, as well as to U.S. government bonds, whose yields will rise”, Karkhalev explained.

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