Spot bitcoin ETF

In plain terms

It lets investors buy and sell bitcoin exposure in an ordinary brokerage account, like a stock, without a crypto exchange account or digital wallet. The fund manager uses investors' money to buy and hold actual bitcoin, which is why it is called a "spot" ETF. Earlier bitcoin futures ETFs tracked the price indirectly through futures contracts.

Why it matters

It opened the door to money that previously struggled to buy bitcoin directly, from pension funds and asset managers to everyday brokerage customers. Daily inflows and outflows from these funds are now watched as a gauge of bitcoin demand. When it approved them, the SEC stressed that the decision was not an endorsement of bitcoin itself.

How it connects to markets

• Rising ETF inflows: usually supportive for the bitcoin price
• Rates and the dollar: many analysts say that as institutional money arrived through ETFs, bitcoin has moved more closely with expectations of rate cuts, a weaker dollar and the mood in stock markets
• Correlation with the Nasdaq: in risk-off periods, bitcoin often falls alongside tech stocks

Where to check

• SEC Chair statement on spot bitcoin products (January 10, 2024)