After much anticipation, the long-awaited exchange-traded funds (ETFs) tracking bitcoin have finally received official approval, signaling a significant milestone for the cryptocurrency market. The U.S. Securities and Exchange Commission granted approval to 11 applications, including those from major players like BlackRock, Ark Investments/21Shares, Fidelity, and Invesco. The majority of these ETFs are set to commence trading on Thursday.
This regulatory approval has set off celebrations in the crypto community, viewing it as a potential game-changer. Estimates for first-year inflows range widely, from $5 billion to $100 billion. While these ETFs offer broader access to bitcoin, it remains to be seen if the notoriously volatile cryptocurrency will be embraced by a larger investor base.
Following the approval, bitcoin’s price remained relatively stable in Asian trading hours, standing at $46,337. This comes after a 70% surge since mid-October, driven by anticipation of the U.S. regulatory decision.
In the broader financial landscape, investors are awaiting the U.S. inflation report, which could impact the Federal Reserve’s stance on interest rate cuts in the coming year. Although traders have adjusted their expectations for the Fed’s easing actions in 2024, pricing in 140 basis points of rate cuts compared to the Fed’s projection of 75 bps, Thursday’s report will provide insights into whether inflation is aligning with the Fed’s target of 2%.
Currency markets experienced a lack of decisive movements, with the Japanese yen recovering some losses against the dollar to reach 145.36. Meanwhile, in equities, the Nikkei continued its strong performance, surpassing 35,000 for the first time in nearly 34 years on Thursday, marking a robust start to the year for the best-performing Asian bourse in 2023.
Futures indicate a positive sentiment in European markets, with limited economic data scheduled for the region. Investors remain cautious, refraining from making significant bets as they navigate the evolving financial landscape.
