Bitcoin touches $49,000 on first day of trading in ETFs

Spot bitcoin ETFs are now trading Thursday on U.S. exchanges, following yesterday’s approval by the Securities and Exchange Commission.

Spot bitcoin index funds (ETFs) are already being traded on U.S. stock exchanges on Thursday, following yesterday’s approval by the Securities and Exchange Commission (SEC), an unprecedented development that has boosted the price of the crypto-asset.

As soon as stock trading opened, the price of bitcoin reacted with a rise and surpassed the $48,000 mark at 8:40 a.m. (El Salvador time) to reach $48,922 at 8:50 a.m., a price not seen since December 2021 and an upward trend is observed.

If the ETFs are successful and have good market volume (more demand), companies like BlakRock that issue them will start acquiring more bitcoin to back these investment funds, which will cause the price of the digital currency to increase due to a supply and demand dynamic.

What are bitcoin spot ETFs?

Spot ETFs are a fund that brings together securities associated with the bitcoin universe, and whose performance is therefore linked to the evolution of this cryptocurrency. This allows investors to try to benefit from the cryptocurrency without buying it directly.

In practice, interested parties bring their capital in fiat currency to the companies that own the funds, the latter buy the bitcoin and grant a series of shares to investors that are equivalent to holding the cryptoasset. The fund will follow the course of Bitcoin, but individuals or companies will not have invested directly in the digital asset.

Until now, there were already bitcoin futures index funds that, as their name suggests, allow trading with the future value of the crypto asset, while the spot ETF fluctuates with the price of the token, replicating its price. However, beyond the difference in operation, the key is that the approval of this type of product means a financial “legitimization” of Bitcoin as another asset.

Source: Diario El Salvador