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The approval of several exchange traded funds by the U.S. Securities and Exchange Commission was an important milestone for the asset class and will increase pent-up demand for it, said Jonathan Steinberg, WisdomTree CEO.

WisdomTree Bitcoin Trust (BTCW) is among the ETFs that were approved on Wednesday. Others include Grayscale Bitcoin Trust (OTC:GBTC), iShares Bitcoin Trust (IBIT), Valkyrie Bitcoin Fund (BRRR), Ark 21Shares Bitcoin Trust (ARKB), Invesco Galaxy Bitcoin ETF (BTCO), VanEck Bitcoin Trust (HODL), WisdomTree Bitcoin Trust (BTCW), Fidelity Wise Origin Bitcoin Trust (FBTC), Bitwise Bitcoin ETF (BITB), and Franklin Bitcoin ETF (EZBC).

You havent seen this level of competition on exposure on day one ever, said Steinberg. This means that there are firms that believe there is merit to the asset class.

Grayscale Bitcoin Trust (OTC:GBTC) is so far the second largest spot commodity ETF in the world with $28B of assets under management.

Bitcoin (BTC-USD) is up 161.28% from a year ago, 53.06% from the last six months, and 6.77% just in the last five days. With a supply of 19,595,962.0, and a market cap of $917.45B.

A 1% to 3% allocation to the coin might be a very sensible decision to make, said Steinberg, amid speculation that it might rally strongly through the end of the decade.

Cathie Wood, CEO of Ark Invest, forecasted Bitcoin to reach $1.5M by 2030.

I think you have to be very careful, said Steinberg. It's a tremendous amount of hype. Some people are speaking in such explosive terms. I think you do want to take that with some caution.

He added that the limited supply nature of the coin makes it more attractive to investors, particularly outside of the U.S., where you have very high inflation or very weak banking systems.

When you contrast Bitcoin with the fees on currencies, it's very attractive, he concluded. But the mechanics here are going to be very similar to gold.

Read more from the original source:
A small allocation in Bitcoin makes sense now - WisdomTree (Cryptocurrency:BTC-USD) - Seeking Alpha

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Bitcoin trading volumes surged on Thursday after the first 10 US exchange traded funds offering direct exposure to the worlds largest cryptocurrency made a long-awaited debut on stock exchanges.

Trading in the nine new ETFs and Grayscale Investments converted $28bn bitcoin trust exceeded $4bn across the New York Stock Exchange, Nasdaq and Cboe exchanges, a day after they received approvals from the Securities and Exchange Commission.

Hashdex, a Brazilian fund manager, had aimed to convert an existing futures product into a spot bitcoin ETF but was unable to do so on Thursday as the SEC continued to review the paperwork for its conversion.

Grayscales bitcoin ETF accounted for about half of the action, according to Bloomberg Intelligence and the company, which said $1bn in trading occurred within 90 minutes of markets opening.

BlackRock said its iShares bitcoin ETF experienced more than $1bn in trading by the end of the day as the historically volatile bitcoin price jumped early on before pulling back to about $46,000, down slightly from Wednesdays level.

The bitcoin price has risen about 50 per cent over the past six months as consensus built around the increased likelihood of the SEC approving spot ETFs, which make it easier for everyday investors to gain exposure to the best-known cryptocurrency.

The regulator had previously refused to greenlight the products but changed course last year after losing a legal battle with Grayscale. Like mutual funds, ETFs hold assets just bitcoin, in this case but they trade on exchanges like stocks and usually enjoy preferential tax treatment in the US.

The $4bn in trading did not reflect an influx of new money at that scale. Some of the trading was likely to have been rotational as investors sold out of Grayscales flagship bitcoin trust, which charges a 1.5 per cent fee, well above its competitors, said Todd Rosenbluth, head of research at VettaFi, a consultancy. It could also include investors selling bitcoin they had bought in anticipation of the ETFs launching, he said.

An earlier ETF based on bitcoin futures, rather than the spot cryptocurrency, pulled in $1bn in investor money in the first two days of its launch in late 2021 by ProShares. This helped fuel expectations that the newly approved spot bitcoin funds would have rapid growth.

I think theres actually going to be some pretty strong inflows out of the gate, said David Mann, head of ETF product and capital markets for Franklin Templeton, which is among the groups launching spot bitcoin ETFs.

Whether theres an initial pop and then a slow climb thereafter, I guess well see. But... given what we think is a sizeable amount of investors who want this particular exposure with an ETF form, we are certainly proceeding as if its going to be gathering assets quickly.

The new ETFs began with about $113mn combined in seed capital, according to spokespeople and regulatory disclosures. The fund launched by VanEck led the way with about $72.5mn in starting money, followed by Fidelity with $20mn and BlackRock with $10mn.

The issuers constitute a broad spectrum of the ETF industry, with large and diversified asset managers including BlackRock and Invesco offering products alongside smaller groups with a stronger focus on digital assets, such as Valkyrie and Bitwise.

The first day of trading went relatively smoothly, said Matthew Sigel, VanEcks head of digital assets research.

The bitcoin blockchain is not terribly congested right now, he said shortly before US markets closed on Thursday.

In a final round of pre-launch filings, most issuers slashed prices in an attempt to compete for flows, with several waiving charges to investors for the initial months after the products are launched.

Bitwise chief investment officer Matthew Hougan said he had heard some ridiculous numbers in the range of $10bn to $20bn mentioned as possible flow targets for bitcoin ETFs in their first year but cautioned against such hopes.

That would be extraordinary, he said. Thats not what the ETF industry has seen.

Even as they were able to offer direct exposure to bitcoin for the first time, some groups were pushing forward with other new products.

Grayscale on Thursday filed to launch another ETF that would sell options on its bitcoin trust the latest addition to the covered call ETF industry, which has surged in popularity in recent years.

This story has been updated to clarify that only 10 funds launched on Thursday, after Hashdex was unable to convert its product as planned.

Read more:
Bitcoin trading volumes surge after debut of long-awaited US ETFs - Financial Times

To help you understand what is going on with the recent Bitcoin rally that started in late 2023,the world of digital tokens and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Heres the latest

If you think stocks have been on a tear, just look at the market for cryptocurrency, where prices soared at dizzying rates last year. Whats behind this rally, and can it continue?

Start with Bitcoin. Its up 69% recently, thanks to a rally that began in early October. After tumbling in 2022, the best-known digital token doubled last year. Less familiar Bitcoin alternatives rose even more. Shares in one crypto company, Coinbase Global (COIN), shot up a staggering 391% in 2023.

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Speculators are betting on new Bitcoin funds that could launch soon. Financial regulators are due to decide whether to allow several Bitcoin ETFs, exchange-traded funds, that would give investors much easier access to Bitcoin via their brokerages. BlackRock, Fidelity, Wisdom Tree and Invesco are some of the sponsors hoping to launch such ETFs.

The supply of new Bitcoin is also due to slow thanks to an upcoming halving. Every four years, the algorithm that governs Bitcoin (BTC/USD) cuts the amount miners get paid to unlock new coins by half. The energy-intensive computing power miners need to solve the increasingly complex computing problems that unlock new Bitcoin could become too costly. Previous halvings led to big jumps in the currencys price.

Theres also hope that cryptocurrency is shaking off its sketchy image. The frauds perpetrated by one-time crypto kingpin Sam Bankman-Fried showed the ugly side of crypto as a potential medium for ripping off nave investors. His recent prosecution, plus other legal actions against bad actors in the industry, could renew public trust.

Clearly, more people are buying and selling various digital coins. The number of accounts that can receive crypto has doubled over the past two years, to 15 million. And more investors with deep pockets are getting involved. Venture capital flowing into the market hit $11 billion last year and is expected to increase in 2024.

And yet, there are plenty of reasons to be wary. Cryptocurrency is famous for booms and busts. Prices peaked in 2021, crashed in 2022, and soared again in 2023 but havent regained their former tops. Plenty of money has been lost on that wild ride.

Most crypto is still used for speculation, not as a medium of exchange, which was its original purpose. Few people buy things with crypto, and few businesses accept it as a payment option. For most users, its more like digital gold, a new asset that offers an alternative to traditional investments and the hope of getting rich fast.

Yet, scams still abound, and regulation remains patchy at best. In the U.S., crypto is generally regulated under existing regulations for other products and commodities. There is no overarching, crypto-specific set of rules to create a level playing field and give investors the confidence that they truly understand how the market works.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand whats coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Whats Behind the Bitcoin Rally? - Kiplinger's Personal Finance

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How to Claim Flare Airdrop with Simple Steps using DappRadar - Medium