The long-awaited availability of Bitcoin ETFs for U.S. traders may finally be on the horizon, thanks to a recent court ruling against the U.S. Securities and Exchange Commission (SEC). In this article, we explore the early history of Bitcoin ETF proposals and analyze the potential gains investors could have made had they invested when the first fund was proposed.
Background: On Tuesday, a federal court ruled against the SEC’s rejection of a request to convert Grayscale Investments’ Grayscale Bitcoin Trust (GBTC) into an ETF. Although the ruling does not guarantee the conversion, it directs the SEC to review the application from Grayscale. The court’s decision could potentially expedite the approval of several other Bitcoin ETFs that are already filed and awaiting approval. Notable companies such as BlackRock (BLK), WisdomTree (WT), Invesco, Valkyrie Investments, Ark Invest, VanEck, and Fidelity have all submitted filings for Bitcoin ETFs.
Before the recent Bitcoin ETFs were filed or the Grayscale Bitcoin Trust was launched in September 2013, an S-1 was filed for a Bitcoin ETF with the SEC. The Winklevoss twins, founders of Gemini cryptocurrency exchange, submitted the Winklevoss Bitcoin Trust as a planned Bitcoin ETF on July 1, 2013. However, their initial filing and subsequent attempt in 2018 were both rejected.
The Winklevoss twins, who are renowned Bitcoin proponents, commented on the SEC’s refusal to approve Bitcoin ETFs, stating that it has been a disservice to U.S. investors and highlights the SEC’s regulatory ineffectiveness. They expressed their support for companies fighting to bring Bitcoin ETFs to market and criticized the SEC for indirectly pushing investors towards FTX, a now-bankrupt exchange involved in a major financial fraud incident.
Following the recent court decision on Grayscale, there is growing optimism that the approval of Bitcoin ETFs is only a matter of time, which is a significant shift from the sentiment 10 years ago when the initial filing took place.
If investors had bought Bitcoin at that time, they would have seen remarkable returns on their investment. For instance, a $1,000 investment in Bitcoin on July 1, 2013, when Bitcoin was trading at around $90.80, could have purchased 11.0132 BTC. At the current price of $27,150.96, that investment would be worth $299,018.95 today, representing a hypothetical return of 29,801.9% over the past 10 years.
In comparison, a $1,000 investment in the SPDR S&P 500 ETF Trust (SPY) over the same period would be worth $3,371.94 today, a gain of 237.2%. Similarly, investing $1,000 in Tesla Inc (TSLA) would yield a return of 3,219.1% ($33,190.53) and investing the same amount in Apple Inc (AAPL) would result in a return of 1,438.2% ($15,382.31) over the past decade.
While Bitcoin’s future performance may not match the same levels of market-beating returns seen in the past, the increasing optimism regarding the approval of Bitcoin ETFs and the upcoming Bitcoin halving in 2024 could potentially drive the price higher.
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