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The United States Securities and Exchange Commission (SEC) recently approved the first exchange-traded funds (ETFs) for Bitcoin. Many crypto investors in Africa welcome this development, anticipating increased demand and prices for Bitcoin. However, some decentralization proponents have expressed concerns about increased cryptocurrency regulation.
ETFs allow investors to gain exposure to an asset without directly owning it. The approval of Bitcoin ETFs is expected to attract significant institutional investment, driving up demand and potentially prices as well. Mukiri Mwirigi, project manager at the Africa Blockchain Centre, said:
“It is good news for Kenyans and all crypto holders because the ETFs open the door for institutional money to flow into bitcoin. It can now be constituent of portfolios of large banks, insurance and investment firms,”
David Gitonga, who started Kanga Labs, said the same thing: If you own Bitcoin, whether you’re in Kenya or the US, you’re in for some good news. People with Bitcoin are happy right now because the price went up, and there’s a chance it could go even higher.
ETFs’ Impact On Bitcoin Speculators
Bastian Blankenburg, CTO of Utu Protocol, noted that this outlook is most relevant for speculators seeking to profit from Bitcoin price swings. As Chainalysis’ 2022 report showed, most African crypto users fall into this group.
For these people, who are in Bitcoin just for the money, anything that will make the price go up is good for them. Having an ETF enables a huge additional client base to buy Bitcoin and that can only help the price, at least in the shorter run, Blankenburg stated.
Yet, many in the industry fear that more rules might hurt Bitcoin’s core idea of being a decentralized currency free from government influence. Ray Youssef, CEO of NoOnes, says Bitcoin lost its revolutionary vision. It’s good for storing value, but its original aim as a means of exchange is fading.
Mwirigi warns that though prices rise, skepticism surrounds government-backed ETFs. Large institutions might monopolize Bitcoin, raising concerns among decentralization optimists. Despite short-term gains, the cryptocurrency’s founding ideals face potential long-term setbacks. Investors should stay wary of government and institutional influence in the market.
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