The crypto revolution finally reached new heights when the SEC approved 11 bitcoin spot ETFs in January 2024. Global investors came in like never before, adding nearly $5 billion in inflows on the first day of trading. As a result, the crossover between traditional finance and digital assets is now firmly established and a new door of opportunity will open for cryptocurrencies as the market continues to mature. This marks the end of a decade-long fight for legitimacy, and shows the success of progress not only in blockchain technology itself but also in the public perception of money. Cryptocurrencies are here to stay.
In the early years of bitcoin, many native cryptocurrency investors believed that Wall Street needed bitcoin, but not the other way around. This one-way love story was true for a while, but mostly due to the lack of regulatory clarity around the world.
The crossover from traditional finance to cryptocurrencies has always been limited and cautious, as every time there was a market correction, Wall Street pundits were more than eager to declare “bitcoin is dead” or “the bubble finally burst.” . In fact, the supposed death of bitcoin occurred almost more than 400 times according to research on Binance, but each resurgence and bull run did not generate skepticism towards this emerging technology. Traditional finance seems to have finally woken up and accepted that the world has changed since the last global financial crisis and is ready for cryptocurrencies.
But now that the bitcoin ETF has arrived, the crypto industry is celebrating the milestone with mixed feelings. In fact, it was quite a trip to get there. ETF approval began in 2013 with the launch of the Grayscale bitcoin Trust. Gemini's spot application from the same year was ultimately rejected in 2017. The first futures ETF was then launched in 2021, paving the way for an eventual spot approval this month.
Since the first approval, many early cryptocurrency investors rejected the spot ETF. They continue to cling to the belief of “not your keys, not your coins.” Ultimately, their concern is that the widespread institutionalization these ETFs represent will challenge the concept of decentralization that many in the crypto community hold dear.
bitcoin investors are right to be cautious about centralization and we are indeed moving in a new direction by embracing traditional finance. Instead of clinging to outdated beliefs, the time has come for the bitcoin industry to transform the existing outdated infrastructure and focus on welcoming more people to enjoy the benefits of digital assets.
We must not forget that one of the fundamental purposes of bitcoin was financial inclusion and helping the unbanked. But now, with the high cost of transaction fees on the bitcoin network and the mining industry becoming more monopolized, the playing field has tilted in favor of those with greater resources and scale of operations.
That said, bitcoin has transformed into a more robust store of value that appeals to both cryptocurrencies and traditional finance, and institutional investors are rushing to accumulate as many cryptocurrencies as quickly as they can. This is all great for the industry to grow and mature, but the people the technology was designed to help in the first place remain more or less as stagnant as before.
bitcoin has also faced many other challenges arising from the technical, such as the threat of numerous forks and debates over increasing block sizes, to bans imposed by various nation-states. With the approval of spot ETFs, the global regulatory environment has taken a turn and now feels much more open and welcoming to bitcoin investors.
As bitcoin becomes increasingly adopted by the mainstream in the form of various financial products, it offers a unique opportunity to directly help those in need. From payments companies to green energy transitions, bitcoin can help struggling economies by supporting their foreign currency reserves and generating new investment opportunities through security token offerings and real-world asset products. Other innovations may include issuing bitcoin-pegged tokens or stablecoins for use in financial applications. The list goes on where bitcoin can impact people's everyday lives by including them in a globally connected digital economy facilitated by blockchain technology.
Looking ahead to the next decade, the revolution to improve lives around the world through cryptocurrencies will continue. This industry, with bitcoin at the forefront, will continue to reshape the understanding of the changing macroeconomic environment, geopolitical risks, and most importantly, the challenging concept of money. The industry has achieved astonishing growth and is already impacting the way we interact in society. Changing the world sometimes feels like a movie where you don't know what the ending is, but it's every little step you take that makes you feel hopeful that it's all worth it.
This is a guest post by Yiwei Wang,with contribution from Nick Ruck, COO of ContentFi Labs. The opinions expressed are entirely their own and do not necessarily reflect those of btc Inc or bitcoin Magazine.