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Race is on for spot bitcoin ETF

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By Keith Ford
  •  
4 minute read

Following BlackRock filing for a spot bitcoin ETF, there are reports that Fidelity is preparing to do the same.

On 15 June, BlackRock filed an application with the US Securities and Exchange Commission (SEC) to register the first ever US spot bitcoin ETF.

Known as the iShares Bitcoin Trust, the publicly traded investment vehicle would track the price of bitcoin directly. To date, the SEC has rejected any attempts to register spot bitcoin ETFs.

Currently, the only bitcoin-related ETFs to be approved are only track bitcoin futures contracts or stocks of companies with exposure to cryptocurrency.

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Citing a source familiar with the firm’s plans, cryptocurrency trade publication The Block reported that Fidelity is preparing to file its own spot bitcoin ETF.

Fidelity had previously applied for a spot bitcoin ETF in March 2021, however, SEC rejected its proposal.

InvestorDaily has reached out to Fidelity for comment.

The news comes after WisdomTree, Invesco, VanEck, and Bitwise all filed for their own applications for spot bitcoin ETFs with the SEC following the news of BlackRock’s filing.

Alex Adelman, chief executive and co-founder of bitcoin rewards app Lolli, said: “Fidelity’s planned initiative to file a bitcoin ETF signals that we are at the start of a powerful new wave of adoption following a spot bitcoin ETF filing from BlackRock, the largest asset manager in the world.

“In the coming weeks and months, other top asset managers will race to file their own spot bitcoin ETFs to remain competitive and be among the ‘first in’ on products that meet strong ongoing client demand for bitcoin exposure.”

Mr Adelman said that while SEC has previously rejected bitcoin ETFs, he believes the new crop has a better shot at approval.

“The SEC’s approval of Volatility Shares’ leveraged bitcoin futures ETF is a vote of confidence that the agency sees bitcoin as a strong underlying asset and that bitcoin spot ETF approvals are not far behind,” he said.

“As institutional adoption continues to drive bitcoin’s price up, leading retailers and Fortune 500 companies will rush to launch bitcoin products and services to meet growing consumer interest.

“Since institutions like BlackRock and Fidelity provide the expertise and custodial services top retailers rely on to serve global consumers, bitcoin services at these institutions will also pave the way for retail to more confidently launch bitcoin offerings to their consumers.”

On the back of the recent ETF applications, the price of bitcoin soared to a one-year high of more than US$31,000 on 23 June, up from about US$25,000 the day before BlackRock filed its application. Despite this boost, bitcoin is still trading at roughly 50 per cent of its high in November 2021.

Angel Zhong, head of department – finance at RMIT University, said: “The recent price rebound of bitcoin has sparked renewed interest among investors, following a period of decline.

“Fuelled by the growing acceptance of cryptocurrencies among traditional financial institutions and the potential impact of regulatory developments on the market, market pioneers such as BlackRock and Fidelity moved in the space of bitcoin ETFs.

“I envisage increasing involvement of major players similar to BlackRock in the cryptoverse. This is overall good news for the crypto market and investors as a whole.”

Ms Zhong added that if approved, the ETFs would lead to increased demand, more liquidity, and greater investor confidence.

“Inclusion in a popular ETF can lead to increased demand for the underlying asset. ETFs are traded on exchanges like stocks and when investors buy shares of the ETF, the ETF provider must purchase the underlying assets to back those shares. This increased demand can drive up the price of bitcoin,” she said.

“ETFs provide liquidity to the underlying assets. By including bitcoin in an ETF, it becomes more accessible to a wider range of investors who can easily buy and sell shares of the ETF. This enhanced liquidity can make the underlying asset more attractive to investors.

“ETFs provided by a range of funds boost investor confidence in bitcoin and the cryptocurrency market as a whole, which can enhance investor confidence and their subsequent participation to enhance fund flow in the market.”

Race is on for spot bitcoin ETF

Following BlackRock filing for a spot bitcoin ETF, there are reports that Fidelity is preparing to do the same.

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