A Brief Guide to the BlackRock Bitcoin ETF Situation
Recently, there has been a lot of buzz around BlackRock's proposed Bitcoin Exchange-Traded Fund (ETF), the iShares Bitcoin Trust, and its relationship with the price movements of Bitcoin. We’re here to break down what’s been happening and provide some clarity on the situation.
BlackRock’s Bitcoin ETF made its debut on the DTCC's list back in August. Interestingly, the markets only seemed to notice this listing yesterday, interpreting it as a potential sign of soon-to-come regulatory approval. This speculation led to a spike in Bitcoin’s price. However, the ETF was promptly removed from the DTCC site, resulting in a 3% drop in Bitcoin's value. This quick shift in market behavior is a classic example of impulsive trading, especially prevalent in the crypto markets.
The Depository Trust & Clearing Corp.'s (DTCC) website is a crucial platform in the financial world, providing clearing and settlement services. ETFs often appear on this site as part of the standard process of coming to market. When it comes to bringing an ETF to the market, appearing on the DTCC's list is a common part of the process. Eric Balchunas, senior ETF analyst at Bloomberg, commented on X (formerly Twitter) that this typically happens within a week of the fund actually starting to trade.
Despite the uncertainty surrounding regulatory approval, BlackRock has been preparing for the launch of its Bitcoin ETF. The company recently updated its ETF filing and obtained a CUSIP number, a unique ID assigned to all securities in the U.S. and Canada. BlackRock may start "seeding" the ETF this month, which involves providing initial funding to purchase a few "creation units" (in this case, Bitcoin) in exchange for ETF shares that can be traded on the open market on Day 1.
The Securities and Exchange Commission (SEC) has yet to approve a spot Bitcoin ETF. The SEC is currently in a public comment period for Bitcoin ETF applicants, including BlackRock. The appearance and disappearance of BlackRock's ETF on the DTCC's list does not indicate regulatory approval, and the SEC has also received an official order to review Grayscale's Bitcoin ETF application.
While the future of BlackRock's Bitcoin ETF is still uncertain, its movements on the DTCC's list have had a significant impact on the price of Bitcoin.