What is Bitcoin ETF? How will the Crypto market develop if BTC ETF spot is approved?

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Bitcoin is gradually being recognized as a legitimate investment option. However, not every individual or organization decides to participate in investing in BTC, be it due to different legal issues between countries, lack of understanding of the cryptocurrency market, or even even distrust in the value of Bitcoin.

To address those difficulties, the Bitcoin ETF has emerged as a solution, helping investors and traditional market participants access Bitcoin through a trusted medium they are already familiar with. So what is a Bitcoin ETF? What does it mean for Bitcoin and the cryptocurrency market? We invite readers to explore Coin Shop in the article below!

What is Bitcoin ETF?

A Bitcoin ETF is a group of assets linked to the price of Bitcoin, purchased and held by funds and stock brokerage firms. They are then converted into Bitcoin ETFs based on the market price. This allows investors to participate in trading on traditional stock exchanges without using cryptocurrency wallets or opening accounts on crypto exchanges.

Bitcoin ETF

The goal of the Bitcoin ETF is to provide access to Bitcoin to investors who do not want to invest directly in cryptocurrency but can still participate in trading without owning the virtual currency. Currently, the US Securities and Exchange Commission (SEC) has accepted Bitcoin ETF for spot delivery on January 11, 2024. Not only in the United States, but Bitcoin ETF spot can also be traded in many other countries. Prominent examples include:

  • In Canada: 3IQ Coinshares, Purpose Bitcoin, and CI Galaxy Bitcoin
  • In Europe: 21Shares Bitcoin ETP, BTCetc – ETC Group Physical Bitcoin, VanEck Bitcoin ETN, Iconic Funds Physical Bitcoin ETP and Bitpanda Bitcoin ETC
  • In Brazil: QR Capital Jersey Bitcoin ETF, WisdomTree Bitcoin

Benefits of Bitcoin ETF

  • Convenience: Bitcoin ETF eliminates the need for investors to learn how to use cryptocurrency wallets or open accounts at cryptocurrency exchanges, making participation easier.
  • Portfolio diversification: An ETF can contain many different types of assets. Bitcoin ETF owners may have in their portfolio not only BTC but also Bitcoin-related stocks and other assets. Even containing only BTC, the Bitcoin ETF still helps investors diversify their portfolios in traditional markets.
  • Easy access price: One of the major barriers for investors who want to own BTC is its high price. Even if the price of Bitcoin drops to $25,000 as it is now, retail investors will still be unlikely to own a BTC. In contrast, a Bitcoin ETF allows investors to gain exposure to BTC within their budget, risk tolerance, and investment goals.

Role of Bitcoin ETF

Bitcoin ETFs give both individual and large institutional investors the ability to conveniently diversify investment funds, without having to directly own the assets the fund tracks. These ETFs provide a simple solution for buying/selling assets, to maximize returns and minimize risk.

Important schedule of Bitcoin ETF Spot Bitcoin ETF is a simulation version of the value of the world’s largest cryptocurrency, helping investors access Bitcoin easily without having to participate in complicated transactions in the cryptocurrency market. . For institutions looking to invest in Bitcoin, they can use the Bitcoin ETF spot without having to deal with the complicated storage and security processes associated with crypto assets.

Due to these benefits, once approved, a Bitcoin ETF can attract strong investment capital from the traditional market. If the Bitcoin Spot ETF is approved, it is expected to open the door for investment capital to pour into the world’s largest cryptocurrency, when traded on a major US stock exchange, convenient for both investors. private individuals, large organizations and even pension funds.

One of the advantages of a Bitcoin ETF is the ability to short sell, allowing investors to be proactive if they predict the price of BTC will decrease in the future, something that is not possible in traditional trading. In addition, Bitcoin ETF also helps investors save time, reduce the market research process and still be able to participate in the cryptocurrency market effectively.

What is the Bitcoin ETF situation in the US?

Although ETFs exist in many different markets, many people’s interest is often focused on ETFs in the US market. Gaining approval from the SEC has become a major challenge for institutions wanting to issue a Bitcoin ETF, with dozens of applications and proposals being rejected over the past few years.

electronic money In June 2022, Grayscale Investments submitted a proposal to convert Bitcoin Trust (GBTC) into a spot Bitcoin ETF, but the proposal was roundly rejected by the SEC. Around that time, the SEC also rejected an application for another Bitcoin ETF spot from Bitwise. However, there are still applications from some institutions that have been cleared by the SEC.

For example, in October 2021, the SEC approved the application for ProShares’ first Bitcoin futures ETF, called ProShares Bitcoin Strategy ETF (BITO). In less than 12 hours after listing on the New York Stock Exchange, BITO achieved more than 1 billion USD in trading volume. During that period, Valkyrie’s Bitcoin ETF also received approval from the SEC and began trading on the Nasdaq stock exchange.

In total, the SEC only approved Bitcoin ETF futures applications and denied spot Bitcoin ETFs due to BTC’s high volatility, unregulated nature, and vulnerability to manipulation. This suggests that US investors may not have access to a spot Bitcoin ETF anytime soon.

How will the Crypto market develop if Bitcoin ETF spot is approved?

If the Bitcoin ETF spot is approved, this could open the door for a large amount of money from the traditional market to flow into the cryptocurrency market, which could be a strong incentive behind the increase. interest (FOMO) in information about Bitcoin ETF approval. The expected time for a decision on the Bitcoin ETF spot is between January 2024 and March 2024, with the expectation that this period will combine with the Bitcoin Halving event, creating a large FOMO wave.

bitcoin One of the advantages of a Bitcoin ETF is the ability to short sell, allowing active investors to participate if they predict the price of BTC will decrease in the future, something that is not possible in traditional trading. Another benefit of Bitcoin ETF is that it helps investors save time during market research.

The Bitcoin ETF represents a major step forward in bringing cryptocurrencies closer to traditional investors, while also promoting cryptocurrency legalization around the world. Key narratives, such as SocialFi, AI, RWA, DePIN, and BTC ETF, could be key points to include in a mid-term portfolio for potential future opportunities.

Through this article, Tiem Coin Shop hopes that readers have gathered new information about Bitcoin ETF, as well as become more aware of its benefits and role for Bitcoin and the entire cryptocurrency market. . Wishing you success in your investment journey!