CRYPTO ECONOMY
Offsetting Obscurity about Bitcoin ETFs
What are Bitcoin ETFs, and why does everybody make a fuss about them?
What is common between spot Bitcoin ETFs and Nolan’s Oppenheimer? The answer is: everyone has been buzzing about both of them for the last month.
Nevertheless, while Oppenheimer’s details (plot, cast, etc) seem clear, the pieces of information about Bitcoin ETFs are piled so cumbersomely that they are making people puzzled. As of my personal experience, I found the urge to disclose this topic as consistently as possible, so that the community will realise the truly game-changing role of the spot Bitcoin ETFs as for crypto as for the economy.
Beginning with Basics
In order to proceed further, it is essential to know the definition of ETF within the crypto dimension.
ETF in crypto refers to an exchange-traded fund, whose price is aligned with a certain digital asset. Crypto-ETFs allow to simplify the access to investments in digital assets on both retail and institutional stock markets.
As a matter of fact, crypto ETFs operate similarly to traditional ones. However, instead of investing in individual stocks or physical commodities, crypto ETFs function with various cryptocurrencies or related derivatives.
Key Benefits of Crypto ETFs
The registration of crypto ETFs is highly supported by the community due to the fact that these initiatives would take global cryptocurrency adoption several stages further. The possibility for ETFs to track the crypto market’s state makes the funds a core advantage for traditional investors, which tend to beware of up-and-down digital assets’ volatility. That’s why the crypto world is drawing so much attention to the topic and keeps abreast.
Yet the clear monitoring of the assets is a foremost yet not the last win of crypto ETFs. By and large, the factors the widespread establishment of crypto ETFs would enhance are better liquidity, cost efficiency, and accessibility. The latter means that traditional investment platforms would access crypto ETFs and allow traditional investors to participate in digital asset trading, albeit indirectly.
Current State-of-Things
As of July 19, 2023, the stock exchanges around the globe mainly operate with futures crypto ETFs and crypto companies' shares. However, the situation is on the verge of radical changes.
“Crypto is the evolution of money, whose time has long come. Bitcoin is the new gold”,
said Volodymyr Nosov, the CEO of WhiteBIT — one of the largest European cryptocurrency exchanges. In the context of the latest events, his apt analogy sounds just like an insightful prediction.
To be more specific, in this day and age, the massive boom of applying for spot crypto ETFs has spread up through major venture institutions. A new tendency is born and fiercely fought for its implementation.
Let’s regard the American stock market as an example and the trendsetter. While you read this article, such investment giants as Fidelity, Invesco, Wisdom Tree, and notorious BlackRock are awaiting the application approval for launching the spot crypto exchange-trading funds. The last one was remarkably the most debated over — as the largest asset manager in the world, BlackRock has also been suffering a severe reputational crisis. Nevertheless, the U.S. Securities and Exchange Commission still gave BlackRock’s application a go, and the forecasts for its outcome are truly promising.
Europe is not far behind as well. As Financial Times reported, the first spot Bitcoin ETF in the region is to launch this month by Jacobi Asset Management. It was originally planned to debut in July 2022 as a consequence of Terra-Luna collapse — a dramatic crypto economy meltdown, which erased tens of billions of dollars from the global digital asset market. Still, it is essential to note that this is not a pioneering case for Europe of integrating crypto ETFs into the stock market. The BTCE, a Bitcoin exchange-trade product, has been listed on Germany’s Xetra exchange since 2021.
How Is Crypto Benefitting From ETF Boom
As has been mentioned earlier, the launch of crypto ETFs is a catalyst in digital asset adoption and economic growth. While shaping a more accessible and robust crypto environment for traditional investors, the industry is being advanced and taken to a new level. What is more, cutting-edge tracking and meticulous market analysis carried out by venture companies would certainly result in diminishing the risks of fraudulent activities and uncredible predictions, which is a foremost issue in the industry.
However, apart from the rational aspects, there is another reason why crypto ETFs are kept a close eye on. In fact, many investors and enthusiasts predict a skyrocketing Bitcoin growth. The foresight are actually sound, given the cryptocurrency volatility and dependence on the informational field. Besides, the reputation of the coin will be greatly enhanced, leading to more investments in it.
Notably, as of July 19, $BTC indicates a bullish trend, and while its volatility decreased, this leaves us with a promising prognosis about the coin’s future. However, the price in this case reflects the reputation of the asset, but surely not the opportunity for gaining profits. And as the leading power in the crypto industry, Bitcoin’s state-of-things is also an indicator of the condition within the sphere, which is really strengthened by massive ETF launches.
Crucial Points in the Nutshell
- Crytpo exchange-trading fund is a type of investment fund whose price is bounded to specific cryptocurrency or crypto-related assets.
- Crypto ETFs give access for traditional investors to securely trade with digital assets on the stock markets.
- Bitcoin spot ETFs are to be launched in the USA and Europe. This will advance the industry and take it several stages further.
- Bitcoin’s reputation is enhanced with spot ETFs adoption.
