BlackRock, the largest asset manager in the world, just applied to launch a new Bitcoin exchange-traded fund (ETF).
As I wrote to you yesterday, this sent shockwaves through the crypto market.
If approved, it would be the first spot Bitcoin ETF in the U.S. that directly invests in Bitcoin, not futures contracts.
Over the years, the Securities and Exchange Commission (SEC) has shot down all 30 attempts to launch the same type of fund.
But BlackRock’s proposal has better chances of approval.
Today, I’ll look at what those are – and what they mean for your money…
Will the SEC Finally Approve a Bitcoin ETF?
After news of BlackRock’s newly proposed ETF – the iShares Bitcoin Trust – went public, Bitcoin’s price spiked.
As of last Friday, Bitcoin gained nearly 25% in value, rising to $31,458. That’s the highest level since June 7, 2022.
All told, this is an exciting development for crypto. The entire space came under scrutiny after several major firms collapsed in 2022. We covered the FTX collapse, for example, in these pages.
These events left investors with huge losses. And the 2022 “crypto winter” – when Bitcoin lost nearly 65% of its market value – took away much of the confidence in the digital asset.
If approved, BlackRock’s spot Bitcoin ETF would be a welcome boost for crypto.
And it could attract substantial new capital and potentially spark a new bull run in BTC.
But can we count on the ETF being approved?
That’s a valid question. After all, the SEC has mercilessly shot down every previous attempt.
But there are many reasons why this time might be different.
First, as the world’s largest asset manager, BlackRock has connections and influence that other managers can only dream of. If there’s any company that knows how to navigate the system and get things done, it’s this one.
Second, BlackRock has a stellar track record when it comes to getting ETF approvals. Out of the 575 ETFs it’s proposed, the SEC has only said “no” to one. That’s an impressive success rate.
Finally, BlackRock may have already found a way to win the SEC’s favor.
In its ETF proposal, the company included something called a surveillance-sharing agreement. According to BlackRock’s application, Nasdaq would oversee the pricing data for the spot market price.
In other words, one of the world’s largest exchanges would keep an eye on the spot market price, making sure things are transparent and prices are accurate for the ETF.
This could help address the SEC’s concerns about market manipulation tied to Bitcoin. Plus, the SEC itself has emphasized the importance of surveillance-sharing agreements in the past. So the agreement grants BlackRock’s application a much better shot at success.
What This Means for You
We’ll have to wait and see if the SEC gives the go-ahead for BlackRock’s Bitcoin ETF.
What we do know, though, is that BlackRock’s move has reignited interest in Bitcoin ETFs. And that alone is bullish.
In fact, since BlackRock’s filing, at least two other investment firms have submitted new applications for Bitcoin ETFs.
Now, let’s be clear: none of this should be your sole basis for investing in Bitcoin. Meaning, you shouldn’t put your hard-earned money at stake solely based on whether these applications receive SEC approval.
That said, BlackRock’s filing is still a massive vote of confidence in Bitcoin from the world’s largest asset manager. It brings a level of legitimacy to Bitcoin that we haven’t seen since PayPal, Square, and Tesla announced their support for Bitcoin in late 2020 and early 2021.
So, if you ever need another reason to add Bitcoin as a speculative asset in your portfolio, this is one.
Yes, Bitcoin is a volatile asset that undergoes periods of violent swings. In 2023, it has performed well so far. And yet, as I write this, the price of Bitcoin is still down about 54% from its November 2021 all-time high of about $68,000.
That means you can still buy it at lower prices before big players like BlackRock swoop in.
That said, with Bitcoin, you never want to dive in headfirst.
Instead, we recommend investing a fixed amount of money on a regular basis, typically monthly or bi-weekly.
That way, you can buy more when the price is low and less when prices are high. This is called dollar-cost averaging.
PayPal or Block’s (previously called Square) Cash App are some of the most convenient options for doing this. With these popular apps, you can start your Bitcoin portfolio with as little as $1.
But, again, remember that Bitcoin is a speculative asset. A small investment can go a long way. So never invest more than you can afford to lose.
Happy investing!
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins
P.S. There’s one more reason why I’m bullish on Bitcoin…
Whether you like it or not, the U.S. will eventually adopt a digital form of the dollar.
As people become more familiar with digital currency, it will pave the way for wider adoption of Bitcoin.
In fact, the Federal Reserve is about to unleash a new technology I’m calling the precursor to the digital dollar.
It will change the very nature of our money… and the financial system as we know it.
That’s why I hosted an emergency briefing called Countdown to Chaos last Wednesday. During it, I revealed what the Fed has in store for you… and how you can prepare yourself for what’s coming.
To watch the replay, click here. But make sure you do it soon… before my publisher takes it down