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Bitcoin price has finally crossed $30,000 barrier. Last time, Bitcoin price above $30,000 was in April, 2023. Along with bitcoin, all major cryptocurrencies have appreciated in price over the last couple of days. For the time being, the FUD created by news of SEC lawsuit against Binance and Coinbase seems to be subduing.

Why Bitcoin price is pumping?

Bitcoin price dropped to $25,000 in the first week of June, 2023. Since last week, three companies have filed for Bitcoin Spot ETF, resulting in 20% price increase in a week. BlackRock, last week, filed for a Spot Bitcoin EFT. WisdomTree and Invesco also followed suit and filed Bitcoin ETF this week. Investors are growing bullish at the news of several companies filling for Bitcoin Spot ETF’s.

What is an Exchange-Traded Fund (ETF)?

An exchange-traded fund (ETF) is a pooled investment security. ETFs can be bought and sold on exchanges like stocks. ETF can track an index, an entire sector, a single asset or group of multiple assets. As ETF can hold multiple assets, it is a popular choice for diversifying portfolio.

What is a Bitcoin ETF?

A bitcoin ETF will contain only one asset i.e., Bitcoin. As the price of bitcoin moves, the price of bitcoin ETF will follow suit. By offering bitcoin as an ETF, it will be possible to trade it on traditional exchanges, like a normal stock market does.

Bitcoin ETF will not directly own bitcoin, rather crypto exchanges or private companies offering ETFs will hold the actual bitcoin.

Why is a Bitcoin ETF required?

It provides a way to invest in bitcoin, or crypto in general, without the hassle of managing crypto investment separate. A bitcoin ETF gives investors exposure to bitcoin without actually buying the bitcoin. There are quite a few reasons why investors will be willing to invest in crypto via an ETF:

1. Ease of investing in crypto; rather than managing a separate portfolio on crypto specific exchanges, it is easier to manage all portfolio under one exchange.

2. People are already invested in traditional financial system and will have instant access to crypto.

3. Everyone is not tech savvy enough to handle the self-custody of crypto.

4. People trust traditional exchanges as they are highly regulated, protect investors and provides a higher level of security.

Will SEC approve a Bitcoin ETF?

At the time of writing this article, response from SEC is still awaited. There is no indication from SEC on how it will be proceeding with latest bitcoin ETF fillings. Investors are quite bullish this time but it seems pretty unlikely that SEC will approve a bitcoin ETF in these circumstances. In case an ETF is approved it will be a huge bullish sign for the market, but it seems unlikely as we stated earlier. An outright rejection from SEC will cause a panic sell and we might test $22,000 levels again.

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