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Bitcoin ETF Applications Start Flowing in as Expectation Grows For BlackRock Success

Last Updated June 26, 2023 7:52 AM
Omar Elorfaly
Last Updated June 26, 2023 7:52 AM

Key Takeaways

  • Institutions are pouring into the Bitcoin market following Blackrock’s ETF application
  • Bitcoin has already experienced a sharp increase in value after the news
  • Technological and legal factors are creating a stable platform for Bitcoin trade and investment

After the news broke out on BlackRock, the world’s biggest asset management firm, applying for a spot Bitcoin trading ETF, several investment firms started making similar moves, ensuring they’d get their own slices of the pie. Another major asset management firm, Fidelity, is also rumored to be applying soon for an ETF and/or acquiring a digital asset management firm with a sizeable portfolio of digital assets.

Reacting to the news above, Bitcoin saw a 5% increase in value overnight. However, the fact that Binance also announced that they’re integrating the Bitcoin Lightning Network into their platform definitely gave the market a significant push.

Looking at these sudden yet significant changes in the market, it’s fair to wonder about the future of the crypto industry. If these mega corporations are moving into the space, will the crypto market stay ‘truly decentralized’? Or will Bitcoin be another way for banks to take over the financial world?

The Suits Pile On The Action

Senior analyst at Bloomberg, Eric Balchunas, broke the news on Twitter regarding Wisdomtree filing for spot Bitcoin ETF. Wisdomtree is a global exchange-traded fund, exchange-traded product sponsor, also an asset manager with over $87 billion in assets. 

Shortly after, Balchunas brought up the news of Invesco, an independent American investment reactivating their 19b-4 form  for their spot ETF.

What Exactly Are These ETFs?

An Exchange-Traded Fund is simply the ability to trade on a market. So, say Invesco has a bunch of clients who want to invest in Bitcoin. Invesco is now re-applying for its license to trade on behalf of its clients on the Bitcoin market.

The reason why this affects the market is that companies such as Wisdowmtree and Invesco do not usually deal with individuals. Instead, Wisdomtree and Invesco will often deal with institutional clients, i.e., companies with large sums of funds who seek to profit through a new channel.

This is great news for people who already own Bitcoin tokens because more tokens bought equals higher demand. Higher demand means higher value. So, Bitcoin is bound to increase in value over time as these companies pour more and more money into the market. 

We can see a clear example of that happening as Bitcoin just grew over 5%  in value overnight following the news on Blackrock. But, just like with everything, there’s a flipside. 

Blackrock, Fidelity, Invesco, Wisdomtree, and other companies that own vast wealth tend to take up majorities of any market, controlling the price and availability of any products, securities. or commodities. We’ve seen this happen on several occasions, especially with the current fiat financial system. 

Who Is BlackRock? Why Do They Matter?

BlackRock is the biggest asset management firm in the world. The company manages assets worth over $9 trillion. Their portfolio includes major shares in household brands such as Spotify and Uber.

With BlackRock applying to start its own institutional trade channel in the Bitcoin market, stakeholders can expect sudden substantial cash pumps into the market, raising the price of Bitcoin and decreasing the supply available for trade.

Perfect Timing For Tech

Binance, the world’s biggest crypto exchange, has announced that they’re integrating the Bitcoin Lightning Network onto their platform. The technology is allegedly going to help Binance process over one million transactions per second while lowering service fees users are charged by the exchange.

For some background information, Binance is currently in a legal battle with the US Securities and Exchange Commission on a long list of accusations, including wash trading, commingling customer funds, and evading US regulators. 

The SEC is also going head-to-head with several other exchanges, including Coinbase, the exchange Blackrock is using as a custodian for its ETF, as well as Ripple. Ripple has been dealing with the SEC’s legal accusations for over two years regarding a crypto token called XRP which the SEC is claiming is an “unregistered security.”

Potential Future Of Crypto?

It’s important to note that whenever the SEC is legally challenging any crypto-related business, they always leave Bitcoin out of the discussion. The government even used Coinbase to sell off their own crypto tokens in the past. This seems awfully convenient for companies such as Blackrock and Fidelity, who are now staking substantial funds on Bitcoin specifically. 

The future of crypto seems uncertain for altcoins. All signs point towards a Bitcoin-based market. Moreover, with financial tycoons making their moves, the market is likely to be controlled by major financial institutions, which omits the point behind cryptocurrencies, decentralization.