A pivotal shift occurred after the US Securities and Exchange Commission’s (SEC) recent approval of the first spot Bitcoin ETFs (exchange-traded funds) that invest directly in BTC. 

This breakthrough offers investors an innovative pathway to engage with the largest cryptocurrency. Consequently, it blends traditional investment mechanisms with the cryptocurrency market.

What Are Spot Bitcoin ETFs?

Spot Bitcoin ETFs represent a shift from previous investment models in the crypto industry. Traditional ETFs based on Bitcoin futures involved speculation on future prices, whereas these new ETFs hold actual Bitcoin. Therefore, the new investment products align investors’ interests directly with the current market price of the cryptocurrency. 

This shift to physical BTC holdings provides a more transparent and direct investment strategy, decreasing the complexities of futures contracts. Moreover, given the increasing Bitcoin scarcity, it can create a demand shock. 

“Mainstream institutions have not had a high bandwidth compliant channel to invest in this asset class until the spot ETFs. I think the approval of the spot [Bitcoin] ETFs is going to be a major catalyst that’s going to definitely drive a demand shock. Then, that’ll be followed in April with a supply shock because there are about 900 BTC a day available for sale by natural sellers, the miners, and that number is going to be cut [due to the Bitcoin halving] to 450 Bitcoin a day. It’s a pretty big deal,” MicroStrategy CEO Michael Saylor said. 

Read more: Bitcoin Halving Cycles and Investment Strategies: What To Know

How to Invest in Spot Bitcoin ETFs

The process of investing in Bitcoin ETFs mirrors that of traditional stocks, offering

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Author: Harsh Notariya

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