Why I Think the Gemini ETF is Approved
I would like begin by defining an ETF, because when I first heard about it around 2014 I din't know exactly what it was. Simply put, the ETF issues shares on a underlying asset. In the case of the bitcoin ETF, that will be bitcoins. For example, 1 share in that particular ETF could represent 0.01 bitcoins. The actual cryptocurrency will be managed by the Gemini Trust Company (GTC), the private keys will be distributed to different personas in different geographic locations, cold stored.
There are a few components of an ETF.
NAV (Net Asset Value) — This represents the daily updates by the fund managers in the end of the trading session, valuing the assets held minus the fees of the fund.
INAV (Indicative Net Asset Value) — This is the calculation of the asset value at market price.
PD (Primary Dealer) — These are firms that can redeem ETF units from the fund manager. In the case of the bitcoin ETF these will be known as quant/high-frequency trading firms.
DMM (Designated Market Maker) — These are firms contracted by the ETF that will provide bid/ask at specific market prices.
PCF (Portfolio Composition File) — This is the report of the amounts of assets the fund holds and will be published in the beginning of each trading day.
I still do not fully understand the ETF creation mechanism, but I think that DMMs will sell/buy shares on the market and then buy/sell bitcoins at specific points of time before the PCF report. Honestly, I'm not that interested in the specifics of their mechanisms since I prefer to hold the bitcoins itself, instead of some IOUs.
In my opinion, the ETF is already approved.
I watch the market daily. Since the last meeting between regulators, Gemini owners and their business partners (on February 14), the price of bitcoin went up by more than 20%.
Why I think it is approved? Because the Gemini exchange is one of the most (if not the most) regulated cryptoexchanges. In addition, the Winklevoss are serious entrepreneurs coming from the legacy financial sector and have operated various other businesses there.
Some people argue that a bitcoin ETF is an Trojan horse that will give banks and big financial institutions more say when it come to the bitcoin price. This is ok. The Bitcoin network itself will be fine (hopefully after we end the FUD around block size). Also, the core bitcoin community will also be fine, since “old-timers” are quite used to price fluctuations. Moreover, it is very possible that institutional investors are already “in bitcoin” and have participated in its price formation for a while.
All of this is my own subjective, personal opinion based only on my experience. I'm just bliblabluing :)
