Bermuda Stock Exchange launches Bitcoin ETF: What it means for the cryptocurrency market

• Brazillian fund manager Hashdex got the approval for Bitcoin’s ETF.
• The fund will be launched on the Bermuda Stock Exchange in collaboration with Nasdaq.
• The launch may fail to live up to the market’s inflated expectations.

The Brazillian fund manager Hashdex got approval for the Bitcoin ETF. The new instrument will be launched on the Bermuda Stock Exchange (BSX) in partnership with the American stock exchange Nasdaq, setting the stage for the whole new era in the cryptocurrency trading industry. 

According to the partnership agreement, the parties have collaborated to create the world’s first Bitcoin ETF or Exchange Traded Fund that will be launched on the Bermuda Stock Exchange as Hashdex Nasdaq Crypto Index ETF. 

The fund will launch 3 million Class E shares, and it may go live until the end of the year; however, no further details about the long-awaited ETF are available at this stage. Commenting on the announcement, The Chief Executive Officer (CEO) of Hashdex, Marcelo Sampaio, explained that they had chosen Bermuda due to their friendly regulatory approach to the cryptocurrency industry. He also added that Nasdaq’s involvement confirms the growing institutional interest in the new type of assets. 

 “This process should also speed up the entry of institutional investors in this segment. It is a trend that increasingly becomes concrete.”

What is Bitcoin ETF and why it is so important

In recent years, the various financial and cryptocurrency institutions, including Winklevoss brothers and Wilshire Phoenix and the NYSE broker Arca, filed applications for Bitcoin ETF with US Securities and Exchange Commission (SEC). The American regulator rejected all of them because the cryptocurrency market is poorly regulated and too risky at this stage. 

Note: ETF, or Exchange Traded Fund, is a type of financial instrument that tracks a collection of securities, indices, or a combination of various assets. They are listed on traditional exchanges, and their shares are traded like an ordinary stock, allowing users to get exposure to individual markets and industry sectors. They involve low expense ratios and fewer broker commissions, which makes them more attractive to smaller investors. 

The launch of Bitcoin-based ETH was supposed to become a significant milestone for the cryptocurrency industry, bridging the gap between digital assets and traditional finances. Many experts believed that the absence of a regulated instrument prevented large institutional investors from joining the cryptocurrency market and facilitate its mass adoption. 

Bitcoin futures launched on Chicago Board Options Exchange (CBOE) and Chicago Mercantile Exchange (CME) in 2018 was the first step in that direction. Many experts believe that ETFs on the cryptocurrency would become the next logical step to attract global institutional investors such as sovereign wealth funds, pension funds, and endowment funds to the crypto market.

Is the glass half-full or half-empty?

The vast majority of experts from cryptocurrency and traditional finances regard the launch of Bitcoin ETF as a significant victory and a giant leap ahead for the whole industry of digital assets. 

Thus, earlier this week, former Goldman Sachs executive and fund manager Raoul Pal shared his view on the idea of Bitcoin ETF and predicted that the SEC would eventually approve it. However, Bermida’s regulator seems to be one step ahead:

“I’m going to give you the biggest front-running opportunity of your life: they will get an ETF across the line. There will be billions of dollars that pour into it. Every pension plan will allocate some money to it. Every family office will allocate some money to it. And the more the price goes up, the more they will allocate.”

However, some have contrarian views. For example, Chalie Lee, the seventh-largest digital asset creator, confessed that he had been wrong about the potential impact of Bitcoin ETF. Now he believes that the launch of the financial instrument’s launch won’t become a sustainable driver for a new bullish cycle on the cryptocurrency market.

Bitcoin’s reaction is muted so far

Meanwhile, the cryptocurrency market reaction has been muted, to say the least. All top-10 coins are nursing significant losses on a day-to-day basis. BTC/USD is down nearly 4%, Ethereum has lost over 7%, Ripple’s XRP is 5% cheaper from this time on Monday. 

BTC/USD slipped below $10,500 and returned inside the previous consolidation range that limited the price movements during the first half of September. 

BTC/USD daily chart

The pioneer digital asset may be vulnerable to further losses if it fails to regain the ground above the critical area of $10,500 in the nearest trading sessions. Read more detailed technical analysis on BTC/USD here.