US Asset Managers Optimistic Despite SEC Social Media Scare on Bitcoin ETFs

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  • Post last modified:January 10, 2024
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In the midst of anticipation surrounding the potential approval of spot bitcoin exchange traded funds (ETFs) by the Securities and Exchange Commission (SEC), US asset managers remain optimistic about the transformative impact such approval could have on the cryptocurrency market. The SEC is set to decide on Wednesday whether to greenlight the application from asset managers Ark Investments and 21Shares, a decision that could pave the way for similar applications from industry giants like BlackRock, Fidelity, and VanEck.

The introduction of spot bitcoin ETFs would represent a significant milestone for the crypto industry, offering both institutional and retail investors exposure to the world’s largest cryptocurrency without direct ownership. This move could potentially provide a major boost to a market that has faced challenges and controversies.

Despite a brief moment of confusion on Tuesday, caused by a fake post on the SEC’s social media account falsely claiming approval of all bitcoin ETF applications, industry insiders express confidence in the SEC’s decision-making process. The regulatory body disavowed and promptly deleted the fraudulent post, attributing the incident to a compromised account due to an unauthorized individual gaining control of a phone number linked to the SEC’s account through a third party.

Several industry executives, who preferred to remain anonymous, stated earlier this week that they anticipate the SEC’s approval of the Ark/21Shares product and potentially others. The SEC, however, has maintained silence on its decision, with a spokesperson emphasizing the agency’s policy not to comment on pending applications.

The recent incident has not derailed the ETF approval process, according to insiders, who expect the SEC to proceed with the decision as planned. In preparation for potential approval, issuers have disclosed their planned ETF fees, a crucial detail typically finalized before a product launch.

Market analysts and financial experts predict a positive outcome for bitcoin ETFs, with the potential to draw substantial investments. Standard Chartered analysts estimate inflows ranging from $50 billion to $100 billion for this year alone, potentially driving the price of bitcoin to $100,000. The approval of ETFs would be a significant step in legitimizing bitcoin as an asset class, according to Andrew Bond, MD and senior fintech analyst at Rosenblatt Securities.

While the recent hack created momentary volatility in the bitcoin market, industry experts believe it will not impede the SEC’s decision-making process. Bitcoin, which has experienced over 70% growth in recent months in anticipation of ETF approvals, briefly surged to $48,000 on the fake post before settling around $45,000.

If approved, the SEC’s decision would mark a notable shift from its decade-long stance of rejecting bitcoin ETFs due to concerns about market manipulation. SEC Chair Gary Gensler, who has been cautious about the crypto industry, recently warned about the “exceptionally risky” nature of crypto asset investments. Some investor advocates and critics argue that bitcoin is still too immature for ETF approval, emphasizing the risks associated with the cryptocurrency. However, the potential approval of spot bitcoin ETFs could signify a turning point for the industry, providing a regulated avenue for investors to gain exposure to the digital asset.