What is an ETF? –
Cryptoren explains that an ETF or exchange-traded fund
“Is a passive investing instrument that tracks underlying benchmark indexes (such as the NASDAQ-100 Index, S&P 500, Dow Jones, and others), commodities, bonds, or portfolios of assets and replicates their performances. ETFs can be traded like a common stock on exchanges, combining the diversified holdings of a fund with the low cost and tradability of a share.”
A Bitcoin ETF would allow investors to get into Bitcoin without actually buying the asset themselves. This means that investors don’t actually need to hold bitcoin, go through the purchasing process, or even safely store their private keys. An ETF would also allow investors to short shares if they believe that bitcoin will go down and so it gives more avenues for investors to make money. One of the biggest reasons institutional investors are not getting into Bitcoin is because of the security aspect of it. Institutional investors with millions of dollars, don’t want to get hacked and lose their irreversible bitcoin. So instead, having a platform for these investors that will allow them to invest without actually dealing with the coin is an incredible opportunity.
Market Effect –
Yesterday on August 7th, 2018, the SEC has delayed its decision on the Bitcoin ETF until September 30th which has the market shaking. The VanEck and SolidX Bitcoin Trust is set at $200,000 to market towards institutional investors and away from individual seasonal investors. As a result of the uncertainty that bitcoin will be accepted the market has taken a huge dive with Bitcoin dropping almost 9% and Ethereum dropping over 10%. The investing strategy of buying the rumor and selling the news has certainly been played.
How bad is this really? –
The ETF would help bring in a lot of money from institutional investors and would help the bitcoin community and cryptocurrency community in general. The ETF would potentially bring in more interest from people when bigger investors enter the market, and people see interest from “whales”. As a Bitcoin community and as enthusiasts this delay in a decision by the SEC shouldn’t really be a huge downfall. The core values of Bitcoin is resistance and moving away from the regulatory traps in the fiat world. Delaying the Wall Street institutional investors from buying into Bitcoin and its core beliefs shouldn’t have to be rushed. These institutional investors will bring in a lot of money, however, will also be a part of something that they have tried to destroy. As an enthusiast or current investor, the ETF delay should not be a scary sight as the play on Bitcoin in the long term won’t have a negative effect. Short term Bitcoin has taken a big hit, but if the value and utility of Bitcoin remain the same, then this downfall will clear up in time. Keeping institutional investors out and building on the technology will not be harmful to the market in the long run, timing the institutional investor’s entry will be key.
Get in Touch