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Bitcoin ETF — Good or Bad?

Bitcoin — ETF — Good or Bad?

  • Futures are contracts (just promises) for a specific amount of something delivered at a specific time. In this case Bitcoin, each month.
  • These are cash-settled futures, it is just the promise to deliver an amount of cash that could buy real Bitcoin. BTC is not being delivered.
  • People can either buy a promise now to get enough cash to buy bitcoin on a settlement date in the future, or they can sell now, get the cash, and promise to deliver enough cash to buy bitcoin on a settlement date in the future. The first is a bet that bitcoin will go up, and the second is a bet that bitcoin will go down. In neither case does any bitcoin change hands.
  • The ETF is layered on top of this cash-settled Bitcoin futures market which means that the price is determined by the futures contract price. The futures contracts have to be settled between the futures markets participants and rolled from month to month.

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Tron Black

Freedom advocate, crypto developer, businessman, entrepreneur, and lead dev for Ravencoin — a top crypto-currency and asset issuance platform.