During a webinar hosted by Chainlink, Sandy Kaul, Head of Digital Asset, discussed the implications of the Bitcoin ETF on blockchain innovation and the protocol economy.
After the SEC authorized eleven spot Bitcoin ETF proposals from notable firms, including BlackRock, Fidelity, and VanEck, the eagerly anticipated launch of Bitcoin’s ETF occurred on January 10, 2024. The spot bitcoin exchange-traded fund (ETF) allows common investors to profit from bitcoin price volatility through conventional stock exchanges.
Brokers offer Bitcoin futures exchange-traded funds (ETFs) on standard exchanges for trading purposes. These ETFs are collections of Bitcoin-related assets. A spot bitcoin ETF, akin to conventional equity investments, facilitates direct investment in bitcoins as the fundamental asset, obviating the necessity for price-sensitive derivatives contracts.
Spot bitcoin ETFs provide mainstream investors with a convenient and regulated entry point into the domain of digital currency investment. Despite this, investors are obligated to cover operational costs such as brokerage commissions and management fees, despite not being required to personally purchase and hold bitcoins.
Sandy Kaul, Head of Digital Asset and Industry Advisory Services at Franklin Templeton, lauded Bitcoin’s exceptional performance over the past decade on March 25. She underscored Bitcoin’s status as the asset with the highest performance. Investor interest in AI securities has been substantial ever since the OpenAI LLM models were unveiled, according to Kaul, drawing parallels to the inventive capacity of Bitcoin.
Despite making progress in the asset class, Bitcoin has long been criticized for its market rigidity. The high cost of the cryptocurrency has posed a challenge for regular investors seeking to obtain a solitary BTC. On cryptocurrency exchanges, numerous investors purchased lesser Bitcoin fractions, but the introduction of the ETF was a game-changer. ETFs facilitate the acquisition of Bitcoin exposure by average investors via a broker within the confines of their investment objectives, risk tolerance, and financial means on a conventional stock market that is completely regulated.
Additionally, more investors will have access to usable ‘protocols’ as a result of the introduction of ETFs, which will fuel the expansion of the protocol economy. Utilization of the protocol increases anticipated returns. Retail investors are pleasantly surprised by the transition from conventional company investments to holding shares of a protocol. The Bitcoin ETF has facilitated the introduction of additional inventive investment options. The provision of investor autonomy by Bitcoin ETFs and spot ETFs has fundamentally transformed the investment industry.
