Crypto investors await today's SEC decision on bitcoin ETFs

Wed, Jan 10, 2024, 6:34 AM

On Tuesday, the Securities and Exchange Commission's (SEC) X account was reportedly compromised as it issued a false report of approving a spot bitcoin ETF. Wednesday, January 10 (today) is the deadline date for the SEC's decision on bitcoin ETFs. Bitcoin (BTC-USD) hovers just above $45,000 Wednesday morning.

Yahoo Finance's Julie Hyman joins the Live show to comment on the situation and weigh the benefits and risks tied to pending bitcoin ETFs, including crypto volatility and ETF fees.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

BRAD SMITH: We see Bitcoin's price dipping this morning after spiking Tuesday evening when a post on the SEC's official X account claimed that Bitcoin ETFs were approved. Chair Gary Gensler swiftly responded saying that the account was compromised and the regulator has not approved any listing and trading of spot Bitcoin ETFs. So here's with what this means ahead of today's decision is our very own Julie Hyman. Hey, Julie.

JULIE HYMAN: Ooh, hey. I was on the-- I was on the air yesterday when this happened, right, when we first got this tweet, looked very official from the official SEC account, and then about 15 minutes later from Chair Gensler's own account, him saying that that other account had been compromised. It was an unauthorized tweet and their-- tweet, post.

There is some reporting this morning that it had to do with the phone number that was associated with the official SEC account that perhaps someone got a hold of that. And that's how they were able to get access.

Whatever the case is, it sort of in my mind adds to some of the noise that sometimes happens around crypto. And it just feels like a very like 2020s thing to have happened, right, that they came out in this way and was a false start for everyone with this very hotly anticipated suite of products.

There are 11 applicants who are trying to get approval here. And today is the deadline. In particular for Ark investments and 21Shares, it has to do with the court case they had brought against the SEC. And now they are supposed to find out today.

But the thinking is that the SEC doesn't wanna play favorites and is just gonna approve them all at once. The expectation is that will happen by the end of the day today. And they could start trading as soon as tomorrow.

SEANA SMITH: Julie, how should investors-- if we do get an approval or even down the line, how should they be evaluating whether or not buying into one of these funds makes sense for them?

JULIE HYMAN: So I talked to a number of different strategists, traders, both people who like Bitcoin, people who are sort of Bitcoin agnostic. One of them was Dave Nadig over at VettaFi. And he said, you know, if you didn't like Bitcoin before, don't just like it because it's now in an ETF wrapper. And that was something that was echoed by some others, right?

First of all, you have to figure out, do you want to invest in Bitcoin in the first place? And there's lots of information out there about the pros and cons. One of the cons, of course, is the volatility. I talked to Tom Lee at Fundstrat, who is a longtime Bitcoin bull.

There's something called the halving that is coming later this year that could cause some volatility. He said just in general, just because you're an ETF, you're not protected from the volatility. So that's something to keep in mind.

Something else to keep in mind is how much should you allocate through these ETF wrappers? And again, there's a range of different amounts. Tom Lee over at Fundstrat says 2%. Nadig said, if you're thinking about it as an alternative asset, 1% to 3%.

I also talked to Matt Tuttle, Tuttle Capital Management, who's applying for a two times Bitcoin leverage ETF. And he said more like 5% to 10%. So, again, there's a range here.

And then the final question is, which one of them do you buy, right? There is a difference in fees. Some of the providers are gonna be waiving fees for the first six months. And some of the folks I talked to said, you know what, just go with the cheapest. Right?

And that, again, you have to factor in the waiving of the fee. Some of the big operators like a BlackRock are on the lower end of the fee spectrum. There are also questions about which one is gonna be the most liquid, right? Which can you get in and out of the easiest?

And then there's the questions on the back end. I talked to Steve Sosnick over at Interactive Brokers. So I know you're gonna talk to soon. And he said, you also might wanna think about who is the custodian of the Bitcoin? For the majority of these, it's Coinbase. So then you think about, OK, what are the implications of that for the investment? So a lot of questions here that you should be asking if you're interested in these.

SEANA SMITH: A long list of things that investors need to be thinking about before buying into one of these products. All right, Julie. Thanks so much.

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Crypto investors await today's SEC decision on bitcoin ETFs

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