Bitcoin ETF (bitcoin)


The appearance of the index Fund will instantly attract fans and even more investors and, the main thing, money. Tell, what is the bitcoin ETF, what are its advantages and how to make it.

Once Satoshi Nakamoto described the characteristic of the bitcoin cycle: the higher the interest in bitcoin, the more increases the price, provoking a new round of interest and so on. Now this cycle is interfered with wall street, and it literally pumps up bitcoin money.

When wall street entered in this field, bitcoin pulled up, and the big names of investors (and their money) do not just hold the digital currency falling. But for the sake of justice it is worth noting, when the other side "streets" were critical (as it was, for example, in the case of Jamie Diamon), the value of the bitcoin reacted accordingly.

However boom continued, new tools, which allowed even the most stubborn traditional investors to participate in the universal fever. The last step was the emergence of futures.

And, it seems, it's time for another tool, который когда-то безуспешно пытались зарегистрировать близнецы Уинклвосс — биткоин-ETF.

What is an ETF

ETF is investment tool, using bitcoin as an underlying asset. In General, exchange traded funds (ETF) represent derivative financial instruments, which track the value of one or more underlying assets and are traded on a stock exchange within the trading session.

There are two main areas of investment, targeted by such funds. The first is a small income with minimum costs due to the long-term increase in the value of the underlying assets. A second opportunity for profit — day trading. The value of any ETF, following the price movement of the underlying asset, varies throughout the day, and short-term trader to speculate on that.

Similar tools have long been used by traders to generate income from raw materials, for example, oil or gold — it was a way to deal with ounces and barrels, and handy on the stock exchange or any securities.

That means for bitcoin ETF

Obviously, этот инвестиционный инструмент призван еще больше облегчить инвестиции в bitcoin. In addition, it will make bitcoin more attractive due to the simplicity and ease of use.

When CME announced, it plans to offer futures on bitcoin, the price of bitcoin has exceeded $7000 — it became clear, investors from wall street can not wait the usual tool for trading this futuristic asset.

And the next step now is the creation of ETF.

The wait is long

The idea to create a bitcoin ETF is not new: in March this year, the first exchange traded Fund for bitcoin tried to register the Winklevoss twins, but the Commission on securities and stock exchanges of the USA has rejected the initiative. But that was long ago, and then the situation looked quite different in the world of bitcoin, the situation is changing quickly.

Nevertheless, even the Ghost of hope for the establishment of such a Fund resulted in, that month bitcoin twice set price records.

Now, when the CME allowed the registration of futures, obviously, that and the creation of ETF is around the corner — and you know, the Commission is considering such a possibility.

New markets

The appearance of the index Fund would have opened the way into bitcoin investments even for those investors, which are still distrustful of strange volatile digital asset.

Even a simple announcement of such a Fund will lead to skyrocketing prices due to expectations of income in the ecosystem of a new wave of investment money.

There is however opposition. Simon Dixon, CEO and co-founder BnkToTheFuture, believes, that ETF is a very bad way to invest in bitcoin.

According to Dixon, ETF will bring in the bitcoin counterparty risk. And it's stupid, as bitcoin is by its nature — only asset, initially devoid of this risk. It turns out, traditional regulation, forcing bitcoin into the framework of traditional investment procedures, does not increase, and reduces protection of the consumer

To launch a bitcoin ETF?

Once the bitcoin futures on the new York stock exchange has asked the Commission on securities and stock exchanges of the USA (SEC) permission to make a listing of two ETFs, related to bitcoin. Bitcoin ETF and ProShares ProShares Short Bitcoin ETF is not yet available to investors, but if the SEC approves the listing, trafficking starts at the beginning of next year.

ProShares is one of the 10 the largest management companies in the United States, — actually applied for the registration of its funds in September. It happened long before the advent of futures for bitcoin, however, ProShares anticipated, before the end of the year's biggest stock exchange will offer derivatives on cryptocurrencies. Other companies, including VanEck, First Trust and REX Shares, also filed documents for registration of a private EFT, based on the futures for bitcoin.

How ETF will be arranged and how they will change the market?

The ProShares funds will be arranged on the model of other ETF, tied to futures contracts. The management team will open positions in futures on bitcoin, responding to the investment priorities of each Fund. Objective ProShares Bitcoin ETF will be to ensure growth in the value of a share, the corresponding dynamics of futures. ProShares says ambitiously, he would seek, to day and long-term results of the Fund coincided with the dynamics of the underlying asset. At Bitcoin ETF ProShares Short goal will be the opposite: the value of shares will grow with the fall in the price of bitcoin. In this case, the ProShares cautiously said about the coincidence daily results, while long-term performance of the Fund may differ from the behavior of bitcoin. The presence of ETF will significantly increase the number of investors, wishing to earn on bitcoin. Currently, there are instruments like Bitcoin Investment Trust, however, they have their own structural problems, complicating adherence to the cryptocurrency. Similarly, a digital promotions are not always repeat the movement of the underlying cryptocurrency.

How risky are bitcoin ETF?

Unfortunately, bitcoin funds are extremely risky, so, unsuitable for most investors. ETFs based on futures is not always possible to track the dynamics of the underlying asset, since the value of derivatives may differ from the spot price of the underlying asset. For example, currently, March futures are on bitcoin $500 more, than January. Such variations in the commodities markets — the norm, but they can hurt the yield ETF compared with the results of the underlying asset. In addition, the market for bitcoin futures is not so great, like other commodity markets with its own ETF. The average daily volume of futures trading on the bitcoin not exceed a few thousand contracts. For comparison, daily turnover in the oil market is a few hundred thousand contracts. Low volume means a serious risk of sudden price changes, that is compounded by the high volatility of the bitcoin.

Is it worth buying a bitcoin ETF?

The attractiveness of bitcoin funds is the fact, they allow you to invest in bitcoin, not buying the very cryptocurrency. For those, those who believe in its future, it will be a sufficient incentive to buy ETF. Other investors should exercise prudence and to wait for some time, making sure, what funds are able to track the price of bitcoin. If this does not happen, it is better to stay away from them and look for more reliable ways to make money on cryptopone.

Source: https://EN.insider.pro/investment/2017-12-22/bitkoin-etf-faq-dlya-investora/

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