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Bitcoin (BTC-USD) closer fell below $40,000, losing more than 7% of its value in 24 hours. The cryptocurrency has been under pressure since Tesla (TSLA) CEO Elon Musk announced last week that the electric car maker would stop accepting bitcoin as payment due to environmental concerns.

The latest drop came as investors are waiting for the U.S. Securities and Exchange Commission (SEC) to decide on the approval of the first spot bitcoin exchange-traded fund (ETF), which would allow retail investors to buy and sell the digital asset without having to own it directly.

Several firms, including BlackRock (BLK), the world's largest asset manager, have applied to launch a spot bitcoin ETF in the U.S., following the success of similar products in Canada and Europe. A spot bitcoin ETF would track the actual price of bitcoin, unlike the existing bitcoin futures ETFs, which track the price of bitcoin futures contracts.

The SEC has been reluctant to approve a spot bitcoin ETF, citing concerns over market manipulation, fraud, and investor protection. However, some analysts believe that the regulator may be more open to the idea now, as the cryptocurrency market has grown and matured over the years.

One of the leading candidates for a spot bitcoin ETF is Grayscale Investments, which operates the largest bitcoin trust in the world. Grayscale has been trying to convert its bitcoin trust into a spot bitcoin ETF since 2022, but was rejected by the SEC. However, a court ruling in August 2023 overturned the SEC's decision, saying that it was "arbitrary and capricious".

Grayscale has since resumed its discussions with the SEC, hoping to get the green light for its conversion. If approved, Grayscale's spot bitcoin ETF would be the first of its kind in the U.S., and could attract more institutional and retail investors to the cryptocurrency space.

Bitcoin is still far from its all-time high of nearly $69,000, which it reached in November 2021. The cryptocurrency has faced several challenges since then, including regulatory crackdowns, hacking incidents, and market volatility. However, some experts remain bullish on bitcoin's long-term prospects, citing its limited supply, growing adoption, and technological innovation.

What do you think about bitcoin's price movement and the possibility of a spot bitcoin ETF?

Bitcoin drops below $40,000 as regulators eye spot ETF approval

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The launch of the first U.S. spot Bitcoin ETFs in January 2024 has been a game-changer for the crypto industry and investors. These ETFs allow investors to gain exposure to the actual price of Bitcoin, without the hassle and risk of buying and storing the cryptocurrency directly. They also offer lower fees, better tracking, and more liquidity than the previous Bitcoin futures ETFs, such as ProShares Bitcoin Strategy ETF (BITO).

According to a recent article by CoinDesk, the trading volume of BITO has dropped by 75% since the debut of the spot Bitcoin ETFs, indicating a shift in investor preference and demand. BITO, which was the first U.S. Bitcoin-linked ETF, launched in October 2021 and attracted a record-breaking trading volume of over $1 billion on its first day. However, the fund has several drawbacks, such as high fees, futures roll costs, and potential contango effects, which can erode its performance and cause it to deviate from the spot price of Bitcoin.

In contrast, the spot Bitcoin ETFs, such as Grayscale Bitcoin Trust ETF (GBTC), iShares Bitcoin Trust (IBIT), and Bitwise Bitcoin ETF (BITB), hold actual Bitcoins in secure custody and track the spot price of Bitcoin more closely. They also charge much lower fees, ranging from 0% to 0.25%, compared to BITO’s 0.95%. Moreover, they offer more transparency, simplicity, and accessibility to investors, who can buy and sell them through their brokerage accounts, without the need for a crypto exchange or wallet.

The article also cites some experts and analysts who believe that the spot Bitcoin ETFs will have a positive impact on the Bitcoin market and ecosystem, by increasing the demand, adoption, and legitimacy of the cryptocurrency. They also expect more innovation and competition in the crypto ETF space, as more issuers and products enter the market.

What do you think of the spot Bitcoin ETFs? Do you prefer them over the futures ETFs? Share your thoughts and opinions in the comments below.

Why spot Bitcoin ETFs are better than futures ETFs

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