Let’s take a look at what Bitcoin-ETF is and how it could impact the cryptocurrency market.
Although the market is currently in decline, it’s wrong to say that there are no positive news. On the contrary, a bright spot is emerging on the horizon — applications for the creation of Bitcoin-ETFs, which have already attracted the interest of major investment players such as BlackRock and Fidelity, managing trillions of dollars in assets. Let’s dive into what a Bitcoin-ETF is and how it could change the rules of the game in the world of cryptocurrencies.
What is an ETF?
Before delving into Bitcoin-ETF, it’s essential to understand what an ETF (Exchange Traded Fund) is.
An ETF is an investment fund whose shares are traded on traditional stock exchanges and are available to retail investors. They provide investors with an easy way to diversify their portfolios without having to own the assets directly.
What is a Bitcoin-ETF?
A Spot Bitcoin-ETF is a type of ETF that is linked to the cryptocurrency Bitcoin. It is similar to how USDT is tied to the US dollar but with one key difference: the physical storage of bitcoins. This makes a spot Bitcoin-ETF closer to real cryptocurrency.
How does a Bitcoin-ETF work?
The process of creating a Bitcoin-ETF involves several key steps:
- Fund formation: the management company creates the fund and purchases bitcoins.
- Issuance of shares: the fund issues shares, the number of which corresponds to the amount of bitcoins in the fund.
- Listing on the stock exchange: Bitcoin-ETF shares are traded on traditional exchanges such as NASDAQ.
This means that investors can easily buy Bitcoin-ETF shares, gaining exposure to Bitcoin without having to buy and store the cryptocurrency directly.
What could be the consequences of the emergence of Bitcoin-ETFs?
For most retail investors, buying Bitcoin directly remains a challenge due to the need to set up a wallet, go through KYC procedures, and the risks associated with crypto exchanges. Bitcoin-ETFs will provide indirect access to Bitcoin for millions of new investors, potentially increasing demand for this asset.
It’s important to note that an application to register a spot Bitcoin-ETF must be approved by the SEC. Over the past 10 years, none of the 28 applications have been approved. However, now powerful players like BlackRock and Fidelity are actively involved in this process. They might be able to shift the trend and convince the SEC of the importance of creating a Bitcoin-ETF.
Thus, despite the challenges and uncertainty, the world of cryptocurrencies continues to evolve. Bitcoin-ETF is just one of many exciting initiatives that could shape the future of financial markets. We will be closely monitoring developments and sharing all updates with you.