On this modern world in the middle of digitalization the human being tends digitalize everything that he cares or has some sort of value, images, videos, text and now has decided to take store of value and currency to the digital world, it is the case and cryptocurrencies has taken that place, its Bitcoin untill today the king of cryptocurrency.
Lets start by What is an ETF?
An ETF, or exchange-traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors. Read More
ETF for Bitcoin can be the same or even better that it was for Gold, many have said that Bitcoin has become a good competitor to Gold, after 2003 announcement of Gold ETF there was a massive bull run, Bitcoin chart is very similar to Gold before ETF was announce, ETF for Bitcoin could increase liquidity since the institution that holds the ETF in this case a Bitcoin Portfolio has to buy Bitcoin and this would reduce circulating supply with the high posibility of increasing its value and attract investors, this company needs to buy Bitcoin so then others can buy shares of that amount of coins that will be traded daily similar to a stock.
Increasing Bitcoin liquidity and decreasing the available supply could potentially skyrocket the price, it’s an estimate between $40k to $50k price target if ETF is approve, we already saw what happen last year with Bitcoin futures announcement that actually didn’t solve or give anything directly to Bitcoin liquidity except speculation, that’s the only thing that the futures give to Bitcoin pure speculation, now imagine what can ETF can do for Bitcoin.
Before Bitcoin ETF were decline because of the lack of regulations in Asia and in the USA, today we have companies like Coinbase with a Custodian Service and Institutional Account type service, also in Japan and Korea regulations have been put in place, this year SEC already mention that ETH and BTC are not consider securities there for this aspects are out of the table, last time it was say that the probability of having a Bitcoin ETF was 25% since regulations were not in place, this time is very likely that it can be approve but still there is some gray area to cover and its not a 100% sure that BTC ETF will be approve, we will have to wait latter next month but BTC is already having bit of a push based on this news and speculation is starting to fire up.
The Decline & Dump
We also have to consider that if ETF is not approve the price will dump hard, same as last year when Winklevoss proposal was decline, if this happen after the current decrease in price could push Bitcoin price probably to the 4k range for a short time.
Market manipulation in crypto is a huge problem that would take years to be regulated, the denial of ETF could also be another strategy of market manipulation from those with huge buying power just to get as much Bitcoin as cheap as possible.
Lets keep it positive but at the same time keep it real, a trader or investor job is not to be always right, is to do the proper research to invest taking the proper risk and not exceed the risk, risk mitigation is everything, don’t buy everything you read or listen to on the internet, always go against the current and take your own decisions.
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