US SEC approval: A watershed moment

The integration of cryptocurrency into mainstream financial institutions is generating significant attention and raising important questions for Australian investors. As crypto takes centre stage, particularly with the recent developments in US regulations regarding spot Bitcoin ETFs, the impact on Aussie investors and their portfolios has become a crucial consideration.

The move towards mainstream acceptance is particularly highlighted by the introduction of cryptocurrencies into the traditional financial landscape. Large investment firms like BlackRock, Fidelity, and Invesco have taken significant steps, advocating for a new Bitcoin ETF and engaging with the SEC to navigate these regulatory hurdles. This signifies a shift in perception, indicating recognition of crypto's demand trajectory and lending the asset class a newfound respectability within traditional finance.

Crypto proponents have hailed the recent SEC approval as a watershed moment for the industry, anticipating increased legitimacy for the asset class. The approval of ETFs theoretically opens the door for sophisticated investors and funds to engage with Bitcoin more seamlessly, potentially accelerating its path to broader adoption.

This shift is not without controversy. Both traditional and crypto enthusiasts find themselves divided on the integration of cryptocurrency into mainstream finance. Some argue that such integration contradicts the original ethos of cryptocurrency as "the people's money."

Bitcoin’s Bull Run Expected in 2024

Research from Standard Chartered paints a compelling picture on the price trajectory of Bitcoin, forecasting a potential US$100k valuation by year-end. Drawing parallels with the growth of the gold ETF, the projection anticipates a similar upward trajectory for the Bitcoin ETF, albeit on a faster timeline. The forthcoming Bitcoin halving in April, historically associated with bullish market trends, adds positive indicators to its overall market dynamics.

Access to Bitcoin ETFs for Australian Investors

While these developments have primarily unfolded in the US, it's essential to note that in Australia, investors have had the opportunity to access physically backed Bitcoin Exchange-Traded Funds (ETFs) since May 2022, courtesy of the 21shares Bitcoin ETF (EBTC) listed on Cboe Australia.

For those looking to diversify their investment portfolio and gain exposure to US markets ETFs present a convenient avenue. Direct and indirect routes are available for investing in US ETFs, with the option to purchase them through domestic or international brokers, including platforms that provide exposure to US markets. Several brokerage platforms, including Stake, IG, and Superhero, among others, cater to Australian investors seeking access to the US ETF market.

All eyes on the ASX

The ETF acceptance is a potential catalyst for the ASX to approve spot Bitcoin ETFs, projecting an expansion in crypto markets. The anticipation is that these impacts will unfold gradually, with 2024 being dubbed the potential "year of Bitcoin dominance," coinciding with the next halving event. This reduction in supply is expected to transpire in a market characterised by increasing risk appetite, historically signalling a bull run in cryptocurrency trading.

Leading Australian ETF provider Betashares has applied for a Bitcoin ETF in the local market. The anticipated timeline for the fruition of this ETF is around mid-year. This move reflects the markets proactive approach in seeking to offer investors an avenue to participate in the evolving landscape of cryptocurrency within structured frameworks.

Choosing between Exchanges and ETFs

Navigating the complexity of self-custody can be daunting for some, prompting the choice to buy and securely store Bitcoin through reputable crypto exchanges or opt for exposure via ETFs. Unlike the intricacies of personal wallets, crypto exchanges provide an accessible and user-friendly trading experience. Simultaneously, ETFs offer streamlined custody, presenting investors with diverse options tailored to their comfort level and preference in managing their Bitcoin holdings.

A Pivotal Step Forward

In summary, the SEC's decision is viewed as a pivotal step, cracking open Bitcoin to retail and institutional investors. On a local scale, it sets the stage for the ASX to potentially list a spot Bitcoin ETF, further integrating crypto assets into mainstream financial services. While the industry celebrates this historic milestone, the lasting impacts are expected to unfold progressively over time, influencing the landscape of cryptocurrency markets and investor participation.