1. What is ETF? What is Bitcoin spot ETF? ETF is an abbreviation for exchange traded fund, which is a type of fund that allows investors to invest in a variety of assets such as stocks, bonds or commodities by purchasing fund shares, thereby achieving asset diversification and risk control. Unlike traditional funds, ETFs can be bought and sold on the stock exchange. Compared with ordinary funds, ETFs have more flexible trading methods, lower investment thresholds, and higher liquidity.
As we all know, most of our Bitcoin investments are made on centralized exchanges. As long as we buy real Bitcoin on regular exchanges, we will buy real Bitcoin spot. Bitcoin spot ETF is an ETF based on the spot price of Bitcoin. Its trading price is the same as the spot market price of Bitcoin. Investors can obtain investment income from Bitcoin by purchasing shares of Bitcoin spot ETF without having to directly purchase and hold Bitcoin.
2. What are the significant advantages of Bitcoin ETFs?
a. Lowering investment threshold:
Bitcoin spot ETF can be bought and sold on the stock exchange. Compared with directly purchasing Bitcoin, which requires registering with an exchange, depositing funds, etc., the investment threshold is lower. It can be imagined that if the ETF can be approved, then a huge amount of funds from the stock and bond markets will indirectly flow into the Bitcoin market. The investment landscape of the entire crypto world will be changed, and more and more people will pay attention to Bitcoin.
b. Compliance supervision:
Unlike directly purchasing Bitcoin spot, which is at risk of being stolen or lost no matter where it is stored, in terms of regulatory compliance, Bitcoin spot ETFs operate within a regulatory framework, providing investors with relatively safe protection and supervision.
3. Discussion on the impact and possibility of Bitcoin ETF on the market
Based on the advantages analyzed above, the approval of Bitcoin ETF is undoubtedly a big boon to investors in the cryptocurrency circle. Once approved, traditional capital will continue to flow into the circle to inject fresh blood, and the cryptocurrency circle will usher in another wave of booming dividends. Since June 15, BlackRock, Fidelity, Vaneck, WisdomTree, Invesco and other institutions have successively submitted Bitcoin spot ETF applications to the U.S. Securities and Exchange Commission (SEC), which also caused quite a stir in the market at the time. The price of Bitcoin soared by 25% in just one week.
Unfortunately, these applications have been rejected or delayed. The reason why they have not been approved is that the SEC is worried about whether the Bitcoin market is susceptible to manipulation and fraud. Regarding the probability of Bitcoin ETF passing, I am still very optimistic. According to history, the success rate of asset management giant BlackRock's ETF application is 575/576. For them, they must have been fully prepared. Now they are expected to enter the next round of bull market in advance. You must know that the engine of the bull market in 2020 is because of Grayscale's fund. Of course, the entry of traditional financial institutions must be to get a share of this market, which means that the future of the currency circle will be more dangerous. For us old leeks who are still present, being able to continue to survive tenaciously and follow the general trend is our way to win.
