It’s been several weeks since Securities and Exchange Commission (SEC) postponed the decision about launching the bitcoin-ETF. The decision will be made by Thursday, August 23. Nevertheless, the special source of CFTC magazine stated that the positive decision will be made with 90% probability until September 21.
It might sound strange, but this news pushed the bitcoin price up, and also triggered a buzz around this topic not only among crypto traders and enthusiasts but also among institutional investors. Here are some graphics that illustrates the positive correlation between BTC price and the buzz around Bitcoin-ETF:
The rise in Bitcoin’s price can be compared with the increase in requests for «bitcoin-ETF»
Breaking down «Bitcoin-ETF»
To begin with, ETF stands for “exchange-traded fund” and describes a kind of investment fund where the price of assets like gold, stocks and oil can be tracked. These assets can then be traded on exchanges, just like conventional stocks. What this means is that investors have the option of buying and selling their holdings in this exchange-traded funds to other investors via the stock exchange.
Therefore, a Bitcoin ETF is one where the underlying asset is Bitcoin. This means that when you purchase Bitcoin ETF, you’re purchasing the cryptocurrency, albeit indirectly. This is because you’re holding the Bitcoin ETF in your portfolio and this ETF tracks the real-time price of Bitcoin. Therefore, the difference is that when you invest in Bitcoin ETF, you have the luxury of trading Bitcoins without the struggles of buying and storing it.
In order to better understand the idea of Bitcoin-ETF let’s consider an example. The asset management company «Bitwise Asset Management» suggests creating the ETF that will have the basis in the form of the index «HOLD 10». This index will include BTC, ETH, XRP, BCH, XLM, LTC, DASH, ZEC, XMR and ETC. By that way, this financial instrument is not limited to one cryptocurrency and quickly adapts to the market.
Possible consequence if Bitcoin-ETF is on market
Generally speaking, the creation of Bitcoin-ETF will make the investments in bitcoin and other cryptocurrencies much easier and safer. The Bitcoin itself will became more legitimate mean of storing capital. This already causes interest of institutional investors, who had previously thought about investing in cryptocurrencies, but who were afraid of the high volatility of such assets. Thus, their positive expectations, fueled by SEC statements, increase the price of BTC during the whole previous weeks.
Nevertheless, the emergence of ETF funds will not only have positive consequences. The holder of coins and tokens will not be an investor, but an exchange fund, so the success of investing will depend on fund’s portfolio managers, regulators actions, etc. Thus, bitcoin will become exposed to counterparty risk, which will reduce consumer protection
From our own standpoint and expertise, we believe that these actions will turn bitcoin into an asset but not in a perfect mean of payment. Therefore, the role of utility tokens will grow up. And this is the reason why we need STQ and develop it as a unique mean of payment for our platform. We believe that out token will help to create the most comfortable and beneficial consequences for our clients and customers.
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