What are Bitcoin ETFs and their Possible Influence on the Market

By Daniel Zo Bitcoin, ETF, SEC

During the last couple of months, there have been numerous discussions about the upcoming Bitcoin ETFs and their potential to increase the popularity, use, trading activity and price of the digital currency.

For those who do not know, ETF represents an abbreviation that stands for exchange traded funds, which are basically market securities, tacked on an index, such as bonds, commodities and index funds. The main difference between ETFs and other exchange-traded assets consists in the fact that the prices of ETFs constantly changes throughout the day, just like bitcoin’s, based on the trading activity. Not only this, but ETFs also generally offer better daily liquidity alongside with lower fees for mutual funds shares, hence why they are a very attractive alternative for investors from all around the world.

ETF

Having Bitcoin-based ETFs will make it easier for those who don’t know much about the digital currency to trade it around, or store it as an asset, capable of producing profit whenever its value changes.

Today, we’re a step closer to having Bitcoin ETFs, considering the fact that the Winklevoss Capital Management’s Winklevoss Investment Trust that has proposed bitcoin ETFs, may get a positive answer from the financial authorities. Bitcoin ETFs were first proposed around a year ago, yet the anomalies in bitcoin trading have made the decision quite difficult for the SEC. If Bitcoin ETFs would be approved, then this would sink around $300 million into the bitcoin market directly, thus considerably increasing the value of the digital currency.

Furthermore, this will also give more changes to investors to get involved in the bitcoin market, thus increasing the sums being invested in digital assets such as bitcoin, alongside with its popularity. It’s worth pointing out that investing in this trust will be significantly easier for qualified investors though, hence attracting both institutions and individuals who are considering the idea of adding bitcoin-based assets to their retirement accounts. Regardless of this aspect, the influx of investors would be huge.

Economic analysis has shown that if approved, chances are that the bitcoin price will surge to around $1645 in March, which would be a great step forward for the market, but also bitcoin’s highest value since its creation.

Based on everything that has been outlined so far, what do you personally think about the likely outcome? Will the SEC finally approve Bitcoin ETFs? Will this move encourage a larger number of investors to join the market, and help the bitcoin price surge? Let us know your thoughts in the comment section below.