[Wise Crypto Life] 23. Bitcoin ETF
[Wise Crypto Life] 23. Bitcoin ETF
In this edition of Wise Crypto Life, we will look into Bitcoin ETFs in detail since it has been cited as one of the biggest reasons for the recent BTC price rise. We invite you to read this week’s release to find out what it is and how the Bitcoin Futures ETF will further affect the cryptocurrency industry!
What is ETF?
Exchange Traded Fund (ETF) is a type of stock that moves in conjunction to a specific stock index. Buying ETFs means that instead of investing 100% in one stock, one can split their investments into 10 stocks that are grouped together. It is advantageous because the operator identifies trends and invests in the safest stocks. ETFs with various characteristics are being released by firms like NASDAQ and KOSDAQ. These themed ETFs will classify and only invest in promising companies such as semiconductors, eco-friendly and autonomous driving ones. Paying close attention to which ETFs are launched is also a great way to understand the trends happening at the time. The buzz surrounding the Bitcoin ETF was an indicator that cryptocurrencies have been recognized as a mainstream trend.
First Bitcoin Futures ETF Launch
Attempts to launch a Bitcoin ETF on NASDAQ are not new. Major US asset managers such as Valkyrie, Invesco, and ProShares have tried to list their ETFs since 2017 but failed to be approved by the US Securities and Exchange Commission (SEC). Although the Bitcoin ETF was released in Canada for the first time in February, the attention surrounding it was lower compared to the one in the United States). As soon as news hit that Bitcoin Futures ETFs would be officially listed on the New York Stock Exchange (NYSE) on October 19th, the price rose and hit a new high on the 20th. However, it should be noted that the approved Bitcoin ETF “BITO” follows ‘futures’ rather than ‘spot’. Since ‘spot’ tracks the actual price of Bitcoin and ‘futures’ follows a contract that sets the price, the price of Future ETFs is inevitably lower than Spot ETFs. Despite this, the release boasted a high trading volume of about $1 billion on the first day of listing, showing its potential to close up 4.9%. Cryptocurrency-related stocks showed strength in Korea as well.
Possibility of Further Listings
Following ProShare’s ‘BITO’, Van Ek’s ‘XBTF’ and Valkyrie’s ‘BTF’ were also approved. Although it is regrettable that they are Futures ETFs, it is clear that the approval alone has greatly increased Bitcoin’s status. There are divided opinions from experts as some believe that it is only a matter of time before the SEC approves Spot ETFs a well. Although it may seem like a minimal step, the small steps are what create a road.
We wrap up Episode 23 of Wise Crypto Life knowing there is hope in the cryptocurrency community as expectations for the launch of the Bitcoin Futures ETF as well as Ethereum ETF are rising.
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