How will Bitcoin (BTC-USD) trade after the approval of a spot Bitcoin ETF? The market got a glimpse of that on Tuesday after the SEC's account on X made such an announcement, with Bitcoin (BTC-USD) spiking to as high as $47,900. The only thing was - the account had been compromised and the tweet turned out to be fake. Confusion ensued as SEC officials tried to get the message out to the media, and it wasn't before long that Bitcoin (BTC-USD) took a turn south, sliding to as low as $45,145 in volatile trade.

Buy the rumor: The truth is, Bitcoin (BTC-USD) has been climbing for months in hopes of approval for a spot ETF, extending the gains of the cryptocurrency, which has more than doubled since last January. The thinking here is that a simple-to-understand and well-structured ETF can bring crypto more mainstream and, in turn, result in many institutional investors and retail portfolios allocating percentages to Bitcoin (BTC-USD). Buying and reporting would be easier due to liquidity and transparency; it can offer investors another opportunity for diversification; and the product would track the performance of Bitcoin (BTC-USD) as an underlying asset.

On the flip side, Bitcoin (BTC-USD) exposure has already been available for years. There are closed-end funds like the Grayscale Bitcoin Trust (OTC:GBTC), as well as ETFs that track Bitcoin futures, such as the ProShares Bitcoin Strategy ETF (NYSEARCA:BITO). There are also publicly traded companies whose balance sheets are mostly made up of Bitcoin, like MicroStrategy (NASDAQ:MSTR), mining firms that include Riot Blockchain (NASDAQ:RIOT) and Marathon Digital (NASDAQ:MARA), and crypto exchanges like Coinbase (NASDAQ:COIN). Retail traders have found additional ways to directly own Bitcoin (BTC-USD) through trustworthy custodians and often don't report profits on their tax returns, which would be a lot harder if they owned shares in a spot Bitcoin ETF.

What to watch: Despite a lot of confusion, a spot Bitcoin ETF is expected to be approved for the first time today following last summer's court ruling involving Grayscale. Big asset managers with skin in the game include BlackRock (NYSE:BLK) and Fidelity Investments, but even if the product were finally cleared, it wouldn't deter the SEC's critical stance on an industry that is rife with "market manipulation and misconduct" (Tuesday's fake tweet didn't help). "If you're considering an investment involving crypto assets, be cautious," SEC Chair Gary Gensler wrote on X. "Crypto asset securities may be marketed as new opportunities but there are serious risks involved."

Pending Spot Bitcoin ETFs: Ark/21 Shares Bitcoin Trust (ARKB), Bitwise Bitcoin ETF (BITB), Fidelity Wise Origin Bitcoin Trust (FBTC), Franklin Bitcoin ETF (EZBC), Grayscale Bitcoin Trust (OTC:GBTC), Invesco Galaxy Bitcoin ETF (BTCO), Global X Bitcoin Trust, Hashdex Bitcoin ETF (DEFI), iShares Bitcoin Trust (IBIT), Pando Asset Spot Bitcoin Trust (PBTC), Valkyrie Bitcoin Fund (BRRR), VanEck Bitcoin Trust (HODL), WisdomTree Bitcoin Trust (BTCW).