What is a Bitcoin ETF? Why is a Bitcoin ETF so important to the market?

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2021-03-22 12:57:40

Lately, there’s been a lot information tin rumor guess about job CBOE pass application Open Bitcoin ETF on the SEC. As a result, the Bitcoin ETF has also become one of the hottest highlights of the cryptocurrency market in 2018. So what is a Bitcoin ETF and why is a Bitcoin ETF so important to the market?

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What is a Bitcoin ETF?

First to learn the fund Bitcoin ETF What is, you need to know what an ETF is.Bitcoin ETF is the abbreviation of the phrase Exchange Traded Fund – an investment fund that trades on stock exchanges, with its operation similar to stocks. Suppose an ETF is a basket capable of storing assets such as commodity securities or stocks … and under the control of an organization called a fund manager. They will be used in transactions with an approximate amount of net assets. More precisely, instead of investing your assets directly in the company / organization that issues shares like traditional stock trading, you invest that asset in an ETF that contains shares of the company / group. That function and full performance monitoring are both possible through the ETF.

Bitcoin ETF Fund is an investment basket that simulates the entire Bitcoin index of the constituent companies. Bitcoin ETFs will indirectly track the value of Bitcoin that is traded on the traditional stock market. Investors in a Bitcoin ETF need to speculate on the value of Bitcoin without having another Bitcoin wallet to protect their assets. This is the advantage of the fund Bitcoin ETF. But sometimes, it is also the downside of this fund. Investors actually don’t own any Bitcoin, look like derivatives. For investors, this makes it easier for them to buy the underlying asset at a lower cost and in a less complicated process while reducing the risk of investors being able to get in and out of the asset. at any time, and can even shorten it. This form also helps new and inexperienced investors easily enter the Bitcoin market. In addition, large investors can either invest in a variety of virtual currencies or invest in securities at the same time Bitcoin investment Include only a single category.

Why is a Bitcoin ETF so important to the market?

Why is a Bitcoin ETF so important to the market

Challenges in censorship

The Winklevoss Brothers – who previously sued Mark Zuckerberg for stealing the idea of ​​creating Facebook, filed for Bitcoin ETF review in 2013. The US Securities and Exchange Commission (SEC) rejected this fund because it was considered too risky. For cryptocurrency investors, they want to take advantage of the burgeoning popularity of exchange-traded funds (ETFs). However, more and more problems arose as they tried to launch the first bitcoin ETFs. The biggest reason is that bitcoin, the world’s largest cryptocurrency by market capitalization, is largely unregulated. That leaves the US Securities and Exchange Commission (SEC) hesitant and refuses to allow an ETF to focus on the new, publicly unproven cryptocurrency market.

The importance of Bitcoin ETF

The importance of Bitcoin ETF

ETFs allow investors to diversify their investments easily without actually owning the assets tracked by the ETF. These ETFs offer a simpler alternative to buying and selling personal assets to maximize returns and minimize losses. A bitcoin ETF simulates the price of the most popular virtual currency in the world, allowing investors to buy in an ETF without going through complicated transactions. Additionally, ETF fund holders will not be directly invested in bitcoin itself. Therefore, they will not need to worry about the complicated storage and security procedures of crypto investors. Thanks to the above advantages, once the Bitcoin ETF is officially approved, it can cause a huge inflow of investment capital into the Bitcoin market. Some experts believe that in the immediate future there will be $ 300 million in funding for the fund Bitcoin ETF is accepted first.

Another advantage over traditional bitcoin trading is that an ETF is an investment vehicle. Investors can short-sell ETF shares if they believe that the price of bitcoin will fall in the future, something they cannot do with the traditional method.

Another important thing lies in the ETF funds are being understood more accurately and clearly globally. As a result, digital currency investment has become increasingly popular in recent years. When an investor wants to enter the crypto space but does not have the time required to learn about all transactions, he can completely focus on trading a medium that he we can better understand it.

The Winklevosses aren’t the only ones looking to be the first to successfully launch a bitcoin ETF. Cboe Global Markets, Inc. (CBOE), the exchange responsible for bringing bitcoin futures, bought Bats Global Markets, Inc., the exchange on which the Winklevoss ETF will be offered. VanEck and SolidX, a fintech firm with bitcoin related projects, have publicly announced plans for 2018 for the VanEck SolidX Bitcoin Trust ETF (XBTC). According to ETF Trends, this ETF will target institutional investors as it will be opened with a share price of $ 200,000. XBTC is designed to track an index related to the bitcoin trading group by spreading the focus of the ETF somewhat, XBTC can help alleviate the issues that make the SEC hesitate.

The importance and the level of influence that Bitcoin ETF has been made evident through an underground clash and race between the biggest names in the crypto world today. Until now, The SEC has yet to accept any Bitcoin ETFsBut investors are still very optimistic. The Commodity Futures Trading Commission (CFTC) explains that the chances of a bitcoin ETF being approved in 2019 are as high as “90% at the moment”, citing the fact that it is related to the fact that The crypto school has been moderated and regulators have been tracking the lack of drama surrounding the future of bitcoin on a number of global exchanges. ”

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