Large firms like BlackRock have been persuading the SEC to allow in-kind creations and redemptions for bitcoin ETFs, a shift from the current cash-based system. In fact, Nasdaq submitted a Form 19b-4 on behalf of BlackRock in January to initiate this change, and several other companies have followed suit.

“These (forms) are currently under review,” Peirce stated. “I believe that it’s something we can look forward to. I can’t make any promises, but we do acknowledge the high level of interest.”

Prior to the SEC approving spot bitcoin ETFs over a year ago, companies were grappling with the technical aspects of how the redemption process for these products would function. The SEC preferred a cash model, which necessitated companies like BlackRock to sell the bitcoin immediately upon removal from storage and then return the cash to the investor.

James Seyffart, a Bloomberg Intelligence ETF analyst, argued in January that this mechanism would increase trading efficiency for funds. Under the Trump administration, the SEC exhibited a more welcoming stance towards crypto compared to the Biden administration. Since the change in regime, companies have been attempting to secure the SEC’s approval for a variety of crypto ETFs, ranging from those tracking XRP, SOL, and DOGE.

Seyffart, along with Eric Balchuna, a senior ETF analyst at Bloomberg, has raised the likelihood of the SEC approving the majority of spot crypto ETF applications to 90% or more.

Disclaimer: This article is purely informational and should not be considered as legal, tax, investment, financial, or other advice.

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Bitcoin ETFs recorded a significant outflow of $1.2 billion from Aug. 30 to Sept. 6, 2024, marking the longest streak of withdrawals since their introduction earlier this year. Data provided by Bloomberg indicates this sharp outflow from the 12 listed Bitcoin spot ETFs is closely tied to the broader downturn in Bitcoin prices.

Bitcoin’s price took a steep dive from a high of $64,668 on Aug. 26 to a low of $53,491 on Sept. 7, shedding 17.28% of its value in just two weeks. Analysts are not surprised, though, as Bitcoin has historically underperformed in September. This pattern has earned the month the nickname “Rektember”, with prices typically recovering in October, a trend referred to as “Uptober.”

Despite this temporary slump, notable financial voices, including Suze Orman, remain bullish on Bitcoin’s long-term potential. Orman believes the increasing participation of younger investors will ultimately drive Bitcoin’s price higher. In a recent interview with CNBC, she stated that as younger investors accumulate more wealth, Bitcoin will become one of their top investment picks, positively influencing the asset’s value.

Crypto Continues Dominance in 2024 ETF Launches

Despite the outflows, crypto remains at the forefront of new ETF launches. Out of the 400 ETFs introduced in 2024, the top four are all Bitcoin ETFs, including the iShares Bitcoin Trust (IBIT) by BlackRock and Fidelity’s Wise Origin Bitcoin Fund (FBTC). Among the top 25 ETFs by inflows, 13 are related to crypto, with 10 Bitcoin-based and 3 Ethereum-related funds. Notably, the iShares Ethereum Trust ETF (ETHA) has already crossed the $1 billion inflow mark by August 2024.

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