Bitcoin ETF application affects people’s mind because it seems like that every signal that SEC released about the approval of ETF will reflect on the cryptocurrency price trend. Many people believed that the approval of Bitcoin ETF by SEC is just around the corner, but there are also many opinions that cryptocurrency might be on the edge of a large-scale investment wave of institutional investors. But all the unsuccessful applications indicates that it seems that it is not that simple to apply through.
So what is Bitcoin ETF? And what is its relation with Bitcoin currency?
ETF means Exchange Traded Funds, also known as Transactional Open Index Fund. Bitcoin ETF as one financial derivative instrument is an open fund with a variable fund share that is traded on the exchange. ETF is a special type of index fund, mainly including stock ETF, bond ETF, commodity ETF, and currency ETF.
To be specific, ETF is a product of the secondary market of traditional exchanges, featuring both stock and index funds, combining the advantages of closed and open funds which can diversify investment and reduce investment risk. In addition, ETF is recognized by governments and has a huge buying population around the world.
As long as the ETF can effectively track changes in the target price index, theoretically speaking, it is possible to build an ETF based on this target asset. Bitcoin ETF is a Transactional Open Index Fund established to track changes in the bitcoin price index of an exchange.
Emerging cryptocurrency combines with traditional financial, through the credit endorsement of traditional financial institutions, investors can provide a safer way to trade, increase the sense of security of investors, and attract more investors and funds.
For the Bitcoin ETF, why are all stakeholders holding their breath and waiting?
First of all, Bitcoin ETF can lower the action bar of investors and attract more investors. Now that the public has heard of someone investing in cryptocurrency and becoming rich overnight, they all want to try the taste of cryptocurrency. But there are too many steps to do in order to exchange cryptocurrency which is too inconvenient. However, if there is a way that allows people to purchase Bitcoin in their own financial account with just one click, without any hesitation, a lot of people surely will participate in it. This means that a large amount of OTC capital can flow into the cryptocurrency circle. ETF is such an investment method which open a traditional investment path for such crypto assets. ETF might be the only legal way for some public in some area to enter the cryptocurrency world. Through the popularity of traditional institutions, it will also help to gather a large number of investors, which is the true value of the Bitcoin ETF, and that’s why so many people want to win the top spot of the Bitcoin ETF.
Secondly, given the current inconsistency in the spot prices of major international exchanges, the Bitcoin ETF can also create more accurate market pricing for this digital currency, and also ensure that the pricing of investment products is not subject to some credit-lower exchanges. The current Bitcoin price can also be properly managed.
In terms of investor safety, due to the limitation of investment path, many individual investors in the United States have to choose some small exchanges that lack market supervision and are not safe. The launch of Bitcoin ETF will provide investors with more security. The way of trading, to relieve investors of worries. Investors will have the opportunity to profit from this liquid, regulated, Bitcoin investment tool, without having to continue to bear the risk of depositing keys, and no longer have to use unregulated online exchanges and concerned by the custodian.