Authored by: Nomi Prins
After news of BlackRock's newly proposed ETF – the iShares Bitcoin Trust – went public, Bitcoin's price spiked. As of last Friday, Bitcoin gained nearly 25% in value, rising to $31,458. That's the highest level since June 7, 2022.
All told, this is an exciting development for crypto. The entire space came under scrutiny after several major firms collapsed in 2022. We covered the FTX collapse, for example, in these pages.
These events left investors with huge losses. And the 2022 "crypto winter" – when Bitcoin lost nearly 65% of its market value – took away much of the confidence in the digital asset.
If approved, BlackRock's spot Bitcoin ETF would be a welcome boost for crypto. And it could attract substantial new capital and spark a new bull run in BTC.
But can we count on the ETF being approved? That's a valid question. After all, the SEC has mercilessly shot down every previous attempt.
But there are many reasons why this time might be different. First, as the world's largest asset manager, BlackRock has connections and influence that other managers can only dream of. If any company knows how to navigate the system and get things done, it's this one.
Second, BlackRock has a stellar track record for getting ETF approvals. Out of the 575 ETFs it's proposed, the SEC has only said "no" to one. That's an impressive success rate.
Finally, BlackRock may have already found a way to win the SEC's favor. In its ETF proposal, the company included something called a surveillance-sharing agreement. According to BlackRock's application, Nasdaq would oversee the pricing data for the spot market price.
In other words, one of the world's largest exchanges would keep an eye on the spot market price, ensuring things are transparent and prices are accurate for the ETF.
This could help address the SEC's concerns about market manipulation tied to Bitcoin. Plus, the SEC has emphasized the importance of surveillance-sharing agreements in the past. So the deal grants BlackRock's application a much better shot at success.
We'll have to wait and see if the SEC gives the go-ahead for BlackRock's Bitcoin ETF. What we do know, though, is that BlackRock's move has reignited interest in Bitcoin ETFs. And that alone is bullish.
In fact, since BlackRock's filing, at least two other investment firms have submitted new applications for Bitcoin ETFs.
Let's be clear: none of this should be your sole basis for investing in Bitcoin. You shouldn't put your hard earned money at stake solely based on whether these applications receive SEC approval.
That said, BlackRock's filing is still a massive vote of confidence in Bitcoin from the world's largest asset manager. It brings legitimacy to Bitcoin that we haven't seen since PayPal, Square, and Tesla announced their support for Bitcoin in late 2020 and early 2021.
So, this is one if you ever need another reason to add Bitcoin as a speculative asset in your portfolio.
Yes, Bitcoin is a volatile asset that undergoes periods of violent swings. In 2023, it has performed well so far. And yet, as I write this, the price of Bitcoin is still down about 54% from its November 2021 all-time high of about $68,000.
You can still buy it at lower prices before big players like BlackRock swoop in. That said, with Bitcoin, you want to avoid diving in headfirst. Instead, we recommend investing a fixed amount of money regularly, typically monthly or bi-weekly.
That way, you can buy more when the price is low and less when prices are high. This is called dollar-cost averaging.
PayPal or Block's (previously called Square) Cash App are some of the most convenient options for doing this. With these popular apps, you can start your Bitcoin portfolio with as little as $1.
But, again, remember that Bitcoin is a speculative asset. A small investment can go a long way. So only invest what you can afford to lose.
This article was printed from TradingSig.com