- BlackRock Is The World’s Largest Asset Manager Has Filed For A Spot Bitcoin ETF
- No Guarantee of Approval, SEC Rejects All Spot ETF Applications So Far
- Exchanges are having a tough time, with job cuts flooding the industry and lawsuits rising amid a regulatory crackdown.
- Approved ETFs could draw even more trading volume from exchanges, writes our head of research Dan Ashmore.
- In the midst of the crypto winter, exchanges have seen a staggering outflow of funds last year, and ETFs will offer institutions and individuals a low-fee, convenient and easy way to gain bitcoin price exposure. deaf.
It’s been a tough few months for cryptocurrency exchanges.
In fact, it’s been a rough year. Coinbase cut 18% of its workforce last June, three months after spending about $14 million on Super Bowl advertising.After that, he reduced the number of employees by one. 20% more January of this year. Kraken and Crypto.com cut his 30% and 20% of their workforce respectively after FTX.
Even Binance, which said it bucked the trend by hiring rather than layoffs and said it plans to expand further in 2023, announced an unspecified number of job cuts last month.
This follows a staggering period of decline for the capital-intensive industry. escape from space. Coinbase has been a good barometer of the industry’s predicament. Its share price is down 86% from its April 2021 listing price. It underperforms nearly every conceivable benchmark in the industry.
Then there’s the little issue of regulation. In the U.S., lawmakers have been tough on cryptocurrencies in general. The SEC sued Binance and Coinbase two weeks ago, but SEC Chairman Gary Gensler accused the sector of “massive violations.”as i wrote last weekwhich is a very big problem.
Bitcoin ETF Blackrock File
Another big event happened last week. BlackRock, the world’s largest asset manager, has applied for a Spot Bitcoin ETF. Perhaps nothing in recent years has been greater than the ever-imminent emergence of the mythical Bitcoin ETF as a source of false hope in cryptocurrencies. To date, the SEC has denied all filings. There is no guarantee that the same fate will not befall BlackRock. But on the other hand, this is Black Rock. The $10 Trillion Asset Management Company represents the most serious application to date.
The latter could be the biggest beneficiary of this if the ETF gets approved (again, no guarantees). The cryptocurrency industry has been fighting for legitimacy for years, but scandals of all kinds have hit the cryptocurrency industry, from Terra founder Do Kwon to FTX founder Sam Bankman-Fried. As a result, it has recently lost its position.
Bitcoin’s price is still down 60% from all-time highs as liquidity is at an all-time low (I recently wrote about how famous stock market correlations broke amid this regulatory crackdown, as bitcoin struggled to keep up with rising asset prices elsewhere), and fear throughout the universe. sentiment is spreading, and interest from financial institutions and trade finance is evaporating from global hysteria. bull market. The BlackRock ETF could help heal some of the reputational damage of the past few years.
Exchanges could be in trouble as a result of ETFs
One interesting angle to all of this, and getting back to the heart of this article, is the rippling effect on exchanges. Not many people talk about this, but the BlackRock ETF could have detrimental consequences for exchanges despite being a boon to the universe.
Oh, it’s time to take a break. The BlackRock ETF is technically a trust, as evidenced by the proposed name iShares Bitcoin Trust. But in practice it works exactly like his ETF with a daily creation/redemption mechanism. By the way, the SPDR Gold Shares ETF works exactly the same way. So, although by definition it is a trust, this does not change anything and for all intents and purposes he can be considered an ETF.
But anyway, if ETFs are approved, will fewer people trade on exchanges? Admittedly, ETFs have the drawback of not giving you a “true” Bitcoin experience. That means you don’t store Bitcoin yourself, you can’t do anything with physical Bitcoin, and you can’t participate in the magic of the blockchain. But so what? I love Bitcoin and I love these things, but how many people really care? And I’d bet that 99% of people only care about that.
Then there is the issue of fees. ETFs are notorious for their fee efficiency. Replacement will almost certainly be expensive. For example, Coinbase’s fee is currently 0.6%. Will people pay higher fees to buy through Coinbase? Again, the reputation of the space needs to be considered here. BlackRock has an incredible reputation as the capital of Wall Street, while cryptocurrency companies like Coinbase have their CEOs fighting the SEC on a daily basis on Twitter.
BlackRock will provide a no-frills, inexpensive and secure way to gain Bitcoin price exposure. Moreover, it is also smoother from a regulatory perspective, as opposed to actually buying bitcoin directly, with no storage issues or other management questions (ironically, ETFs are custodians suggests using Coinbase as a ).
Should ETFs have been approved? (17th time this time) far guaranteed and all other ETF applications to date have been denied), it will be a big win for Bitcoin and cryptocurrencies. By definition, that could mean a win-win for all companies involved in this space. But for exchanges, it also offers a new form of competition at a time when liquidity, trading volumes and prices are down, layoffs and lawsuits are on the rise.