- The SEC has approved the first leveraged Bitcoin Futures ETF in the US.
- BTC’s price witnessed an uptick, velocity declined.
The US Securities and Exchange Commission (SEC) has made a significant move by granting approval for the first-ever leveraged Bitcoin [BTC] Futures ETF. This groundbreaking development marked the inaugural ETF of its kind accessible in the United States, with trading set to commence on Tuesday.
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High leverage, high rewards
For context, an ETF or Exchange Traded Fund is a type of investment vehicle that tracks the performance of specific assets. Here, the BITX ETF focuses on Bitcoin.
What makes this ETF unique is its leveraged strategy, aiming to amplify Bitcoin returns by a factor of two. This leverage is achieved through the use of financial derivatives and other instruments. Thus, investors can potentially benefit from both upward and downward movements of Bitcoin’s price.
The registration of this futures-based ETF directly results from developments within the industry, with special attention given to BlackRock’s initiative to introduce Bitcoin Spot ETFs.
BlackRock, the world’s largest asset management firm overseeing assets worth over $10 million, filed a registration statement for a spot Bitcoin Exchange Traded Fund (ETF). Notably, the BTC ETF falls under the iShares unit of the investment company.
Furthermore, Coinbase, a prominent US-based cryptocurrency exchange, will serve as the custodian for the Trust’s Bitcoin holdings.
Hot and cold
The SEC is anticipated to approve BlackRock’s ETF request as well. While this news appears favorable for the cryptocurrency market, the SEC’s recent actions have contradicted this sentiment. The regulatory body’s lawsuits against Coinbase and Binance have had a detrimental impact on several altcoins, as the SEC classifies many of them as securities.
Only time will tell what the impact of the behavior of SEC will have on the general state of the crpto market.
Impact on Bitcoin
Even though the future of regulation and its impacts on altcoin remains uncertain, the price of Bitcoin has been enjoying a rally due to recent events.
Read Bitcoin’s [BTC] Price Prediction 2023-2024
At the time of writing, BTC was trading at $30,690.44. Its price experienced a significant surge in recent weeks following BlackRock’s announcement.
However, the velocity of Bitcoin transactions noticeably declined. This indicated reduced trading activity as individuals held onto their BTC during this period.
Source: Santiment
