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Science: Bitcoin ETF in five minutes

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Easy to read bitcoin ETF

The Bitcoin ETF

Source: Vernacular blockchain

According to reports, the SEC may decide again by the end of October 2021 whether to approve, reject, or delay the bitcoin ETF. Bloomberg ETF analyst James Seyffart said he believes approval is highly likely. "There is no reason for the SEC and chairman Gensler to make the opposite decision less than a month after making positive comments about bitcoin futures ETFs based on the 1940 law in late September," he said. As of early October, there were nine Bitcoin futures ETFs awaiting SEC approval.

This article was published by Vernacular Blockchain on 11, 2019. Through this article, readers can simply understand what exactly is ETF and what is a Bitcoin ETF?

01 What is an ETF?

ETF is the full name of Exchange Traded Fund, Chinese translation for trading platform Traded Fund.

You might be confused about what a fund is, but when it comes to stocks you should be familiar with it.

Generally, when investors want to buy stocks, they must have a certain understanding of the development prospects and capital status of the companies behind the stocks, and then choose the stocks to buy from thousands of stock categories, which requires too much time and energy for buyers.

The original intention of the fundTo simplify the investment process for ordinary investors. Everyone only needs to give money to a fund manager, through the fund manager to invest the money to buy, after the deadline, only need to pay a certain service fee to the fund manager, the rest of the principal and earnings are owned by investors.

Compared with retail investment, it saves time and energy and reduces investment risks. However, compared with stocks, investors have less freedom to buy and sell funds, and they cannot change this part of assets at will.

On top of this, ETF appears, which is equivalent to endowing the fund with the function of a stock, so that the fund can be listed on the trading platform like a stock and can be bought freelyTo sell.An ETF is an index fund, which is a basket of stocks that track the performance of the broader stock market, put together and packaged into a fund.

It can be regarded as a package, and users invest in ETF, which is equivalent to buying every product in the package. Such a basket of stocks can effectively protect investors from thunder and spread the risk. And buying this package is the equivalent of buying the entire sector, saving time researching each stock.

02 What is a Bitcoin ETF?

Say ETF, then bitcoin ETF is very easy to understand, it is based on bitcoin trading platform trading fund. If you buy a Bitcoin ETF, you are indirectly buying bitcoin.You have a fund that tracks bitcoin rather than you own bitcoin, but the returns are the same.

The Bitcoin ETF tracks the price of bitcoin, and if the price of the Bitcoin ETF goes up, the price of bitcoin goes up; Conversely, if the price of Bitcoin falls, the price of the Bitcoin ETF falls.

Isn't bitcoin the same as a Bitcoin ETF? Isn't the Bitcoin ETF still buying and selling bitcoin here? In fact, the only difference between the two is:We don't have to worry about the bitcoins in our wallets being stolen by hackers or where they should be stored.It's a technical boost. By buying a Bitcoin ETF, we don't have to learn how to operate bitcoin on a computer.

03 What are the implications of bitcoin ETFs?

1, lower the investment threshold, attracting a large number of retail investors.These retail investors usually refer to people interested in investing in Bitcoin but constrained by computer technology.

2. Provide channels for institutional investors to invest in Bitcoin:That brings more money into the market and will create more demand for derivatives.

For example, through bitcoin ETFs, traditional fund companies can also indirectly own bitcoin. Investors buy into a traditional fund, where the money manager can use a portion of the investor's money to buy a small portion of the Bitcoin ETF, which in turn increases the amount of money invested in bitcoin.

3. If the APPLICATION of ETF is successful, it means that it will be brought into supervision and its legal compliance has been officially recognized, which will also bring positive impetus to the development of Bitcoin and even cryptocurrency.