Bitcoin ETF seems to serve the union of two of the most popular sectors of the investment world.
There has been word going around the block concerning publicly traded bitcoin ETFs and possibly being back on the table following the intro of regulated bitcoin futures contracts on the CBOE and CME. That said, in 2018, we did not witness a single cryptocoin getting approval from the United States’ Securities Exchange Commission.
And so, the bitcoin industry has now got a natural ally in the SEC. Hester Peirce, who wishes to see a bitcoin ETF being approved sooner rather than later. Several bitcoin advocates believe that she may fuel the final push that is needed for the SEC to allow bitcoin ETFs to trade on the U.S. exchange.
What Is an ETF?
An ETF (exchange-traded fund), is a kind of venture fund which tracks the price of an asset like gold, oil, or a basket of stocks. The trading of ETFs occurs on brokers in a similar process as stocks. Meaning that any investors (institutional or retail) may purchase and sell ETF holdings to other market partakers over the stock exchange.
ETFs are usually less pricy compared to mutual funds because they are often set up like passive index-tracking funds. They allow investors to gain access to niche markets and asset classes in which it would otherwise be tough to invest.
What is a Bitcoin ETF?
So now, in simple terms, a Bitcoin ETF is an ETF with Bitcoin as the underlying asset, which means that when you buy a Bitcoin ETF, you are purchasing the cryptocurrency, although indirectly.
Because you are holding the new within your portfolio and so this ETF tracks the actual price of BTC. Therefore, the main difference is that when investing in Bitcoin ETFs, you have the perks of trading Bitcoins without the hassles of buying and storing it.
Here is my opinion on some of the benefits the new crypto will bring.
Increase in liquidity
Using the ETF ecosystem, a bitcoin ETF would finally aid in the rise of cash within the cryptocurrency market.
Volatility reduction
BTC ETFs will help the much-needed decrease in volatility. Even though this will increase the price of bitcoin. It will also open up adoption for personal transactions and retail. After all, volatility may be the main thing holding back this adoption.
Transparency of Bitcoin ETFs
The current fee charges for traders and investors will become more honest; better still, the fees may even be reduced in some cases.
Regulated entities
Including fresh Fintec start-ups as well. The regulatory difficulty will much get reduced because of a regulated ETF. As compared to how it is at present with just raw bitcoin.
Respect for bitcoin
With a regulated ETF by Bitcoin’s side, things will be looking up for mass adoption in the long hall. Because a fixed ETF will make bitcoin fairer, and as a result, more and more people will want in.
ETFs exist for mainly all other financial assets and assets such as; copper, gold, any subset of bonds or stocks you can think of, and so on. Blocking an ETF is like trying to stop a rising tide, then it WILL happen. The question is, when will the market be mature enough for the regulators to feel contented.
Final thoughts
For cryptocurrency investors and fans looking to capitalize on the rising popularity of exchange-traded funds (ETFs). The chance of an ETF that tracks bitcoin has to be the best shot for this kind of bond. However, the growing pains and issues in trying to launch the first bitcoin ETF remain.
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