GM DOers! 🚀
Over the years, companies like Grayscale, Fidelity, and VanEck have fought to bring a spot Bitcoin ETF in the US markets. 🇺🇲
However, the SEC has always fought back and rejected each application. 🥊
Last week though, BlackRock (BR), the biggest asset manager in the world, just filed for a spot Bitcoin ETF with the SEC and this could be it…'
If you have no idea what an ETF is, how it works, or what its benefits are, don’t worry, we’ll explain it today.
But before we do that, let’s talk about BR…
This giant manages a whopping $9.5 Trillion in assets. Their business model is essentially taking people’s money and investing it for them.
Their investments are spread out across multiple sectors and industries, and include cash funds, commodity funds, stock funds, bonds, real estate, and more…
Now, they want to get into crypto!
But let me emphasize on what $9.5 Trillion means…
- There’s ~6 Trillion physical dollars in circulation
- The wealth of the world’s 2100 billionaires equals $9 Trillion
And since BR manages almost $10 Trillion, they’re considered one of the biggest financial forces on the planet. 🌎
And any moves they’re making in crypto will have a huge impact on our beloved industry.
P.S.- Shoutout to our community member Paul Martin for sharing this context in our Discord. 💪
So, now that you’re fired up about BR heading into crypto, let’s talk about ETFs…
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What’s a Spot Bitcoin ETF? 📊
A Spot Bitcoin ETF is a type of Exchange Traded Fund (ETF) that directly invests in actual Bitcoin through buying this ETF, like buying a stock on the stock exchange. 📈
‘Spot' means that the ETF involves buying and holding the actual Bitcoin itself on the 'spot market', where assets are bought and sold for immediate delivery.
Countries like Brazil and Canada already have an active spot Bitcoin ETF. But we’ve been waiting for years for the US (the world's biggest market) to have one too…
Today, you can only purchase Bitcoin futures on the stock exchange. However, those don’t reflect the actual price of Bitcoin.
And that’s a problem, and why we need an actual ETF, that essentially works like a picnic basket that only contains apples (where apples represent Bitcoin). So, if you buy a share in this ETF, you are effectively buying a share in a basket of actual Bitcoins that the ETF owns and manages.
The price of this Spot Bitcoin ETF will fluctuate almost based on the current 'spot price' of Bitcoin in the market.
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