Kraken, one of the world’s largest crypto exchanges, saw investors convert more than $1 billion in Bitcoin to cash ahead of a recent SEC ruling on Bitcoin ETFs.
Crypto investors withdrew more than $1 billion worth of Bitcoin and converted it to cash on the Kraken exchange shortly before the Securities and Exchange Commission’s (SEC) recent ruling allowing Bitcoin exchange-traded funds (ETFs).
The withdrawals/conversions were carried out through more than three dozen transactions between January 7th and January 9th. The moves were first reported on blockchain monitor Whale Alert. The transaction amounts were between 400 and 1,000 Bitcoins.
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Massive cryptocurrency withdrawals aren’t always news, but several aspects of these trades stand out. First, they all came within a short time frame. Second, these deals were all closed in the waning hours before a major SEC decision on Bitcoin. This led some to wonder if these crypto investors knew something other people didn’t, or if they were hedging bets by taking profits while they still could.
Why is the SEC decision important?
The SEC allowing spot Bitcoin ETF trading is a huge expansion in the way people can invest in Bitcoin. The traditional model of buying, trading or selling Bitcoin required traders to have a crypto wallet, which was held on a crypto exchange like Kraken. These exchanges, which are not regulated by the SEC, operate on blockchain technology to secure investor deposits.
However, some exchanges were better than others, and if an investor’s crypto wallet was on an exchange that failed, they could lose all their funds and have little return. This kind of volatility and risk has been an obvious deterrent for many potential cryptocurrency investors. The new SEC ruling means investors can buy cryptocurrency without being part of a cryptocurrency exchange because they can buy cryptocurrency ETFs through traditional brokers.
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Where can investors buy Bitcoin ETFs?
Bitcoin ETFs will be listed on the following exchanges:
NYSE Arca: Greyscale Bitcoin Trust (GBTC), Bitwise Bitcoin ETF (BITB), Hashdex Bitcoin Futures ETF (DEFI)
Cboe BZX Exchange Inc.: ARK 21Shares Bitcoin ETF (ARKB), Invesco Galaxy Bitcoin ETF (BTCO), VanEck Bitcoin Trust (HODL), WisdomTree Bitcoin Fund (BTCW), Fidelity Wise Origin Bitcoin Fund (FBTC), Franklin Bitcoin ETF (EZBC ) )
Nasdaq Stock Exchange: iShares Bitcoin Trust (IBIT), Valkyrie Bitcoin Fund (BRRR)
Could this lead to a new high for Bitcoin?
Many observers expect a multibillion-dollar cash infusion into the various Bitcoin ETFs now that investors can invest in Bitcoin by simply calling their broker. This could lead to an explosion in Bitcoin value, which has risen sharply from the low $20,000 range last January to around $45,000. Although the current price is still below the all-time high, the influx of investor capital could pass notch.
The war for investors is on
Now that Bitcoin ETFs have been authorized to trade, it would appear that the cryptocurrency is here to stay. This also means that the various funds are in a protracted battle for the bulk of the new investors who jump into the pool. Even before the SEC approved them to operate, the soon-to-be-approved funds were in a race to the bottom in terms of fees.
In addition, they also hunt whales. The real honey for many of these funds will be the institutional investors, who can pledge hundreds of millions (or more) all at the same time. This could be a great opportunity for interested investors to consider Bitcoin ETFs while fees are still low, which certainly won’t last.
Is Now The Time To Jump Into Bitcoin?
The important thing to keep in mind is that even with SEC approval, a Bitcoin ETF is a basket full of cryptocurrencies. So while the potential exists for cryptocurrency to rise to all-time highs, getting caught on the downside of that wave crest can be devastating. For example, if you bought Bitcoin at $65,000, you are still waiting to profit despite the massive rally in 2023.
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This article Investors in Kraken Crypto Exchange Converted Over $1 Billion in Bitcoin to Cash Ahead of SEC Ruling on Spot Bitcoin ETFs originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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