In this article we will talk about one of the main events in the cryptocurrency world, which is awaited by almost all market participants. As you might have guessed, it will be about the start of Bitcoin ETF. We are going to discuss what it is, how this event can affect industry and when it should happen. So first things first.
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- Definition of the term ETF and some history
- Why are so many market participants waiting for Bitcoin ETF?
- Expert opinions and forecasts
First of all, let’s find out what this abbreviation means. (ETF – eng. Exchange Traded Fund), literally means an investment fund, whose shares are traded on exchange. It is possible to trade these shares in the same way as any other. ETF is a relatively new type of securities, which are a certificate of several assets at once.
With regard to the history of the emergence of ETF, it begins in 1975, exactly when financier John Bogle proposed a new concept of merging 11 different funds. After that, Bogle suggested buying shares of 500 largest companies of the United States of America, in certain proportions, which match their share in the total index 500. At that time, such tactics caused confusion, since “following the market” did not bring good dividends. But on the other hand, ETF fully lived up itself in the last decade of the 20th century, when long-term investors obtained tangible returns with the help of this financial instrument. It should also be noted that investors appreciated ETF during the global crisis of 2007–2008, this instrument showed high efficiency in a tandem with relatively low risks.
Now let’s find out, how it concerns Bitcoin, and why crypto investors and traders are waiting for the start of ETF. For the entire cryptocurrency industry, this is one of the main events, since ETF will significantly reduce risks for institutional investors. Now the capitalization of the entire cryptocurrency market is around 200 billion dollars. The arrival of truly major players will significantly increase this rate.
ETF Bitcoin will be posed as a fund, in which digital coins will become the main asset. In simple words, this fund will buy btc, and sell it`s own shares to investors, which will be reinforced by cryptocurrencies. It will protect investors’ assets, since they do not have to operate with digital coins and exchanges directly. For this reason, the start of ETF is a very serious step for the entire industry, which will certainly determine its future.
According to the most conservative analysts, the start of Bitcoin ETF will increase the market capitalization by $500 billion. It should be noted that the pump of cryptocurrency prices at the end of 2017 occurred, after the start of Bitcoin futures. In a global perspective, ETF has a much greater value than the last year’s futures, so it is quite difficult to predict, how many times the market can grow, against the background of this event.
But is everything really so smooth on this matter? Unfortunately not. The matter is that since 2016, the USA Securities and Exchange Commission (SEC) rejects all applications for the start of BTC ETF. Official reasons are somewhat different, but the main message of the SEC is insignificant amount of the regulated market of bitcoin derivatives. The SEC believes that Bitcoin has not fully strengthened yet and it’s rate can still be easily manipulated, putting assets of potential future investors at risk. But at the same time, staff of the commission refuse to operate with any exact numbers.
But, it is worth noting that many analysts are confident – Bitcoin ETF will appear, but when exactly – this is a good question. Certain experts are confident that this will happen till the end of 2018, but in any case, the official term for the consideration of this issue ends in March 2019.
The start of Bitcoin ETF is a very important event for development of the entire industry. Work in this direction has been going during more than one year, and now the market is ready for it. We are just left to see how this is going to turn out. If you do not want to miss anything, then follow our website, which always publishes the most relevant and the latest information from the cryptocurrencies world.
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