The United States Securities and Exchange Commission (SEC) is planning to bring about ETF for bitcoins. It was suggested to the SEC by the Winklevoss Twins. Before getting to know why the SEC has planned for this move, it is imperative to know what is an ETF.
ETF is known as Exchange Traded Funds. The Exchange Traded Funds are preferred to the Mutual Funds in the stock market owing to the easiness in handling the stocks. Anyone can buy these exchange-traded funds, it is not necessary to hand over the task of trading funds to a broker.
ETF in Bitcoins
Since ETFs’ have the simpler procedure and do not require a lot of intervention, the idea of imparting ETF in Bitcoins has taken the center stage now. There are a lot of advantages that can be enjoyed if ETF is bought into the arena of Bitcoins. This would serve as one of the best investment tools for Bitcoins. This, in turn, would make the Bitcoins market more attractive to investors.
A basic check of the details of the fund is more than enough to invest using ETF. The ETF also use the index. This shows the healthiness of the stock in the market. This also helps in future prediction. When the investors are aware of the functioning of the bond, then it becomes much easy for one to go about buying more stocks. Since bitcoins are on the boom, this idea of introducing ETF in bitcoins market is one of the milestones.
How will Bitcoin ETF approval affect the market?
This is one of the burning topics of discussion in the recent times.
The surge in gold prices
The influx of bitcoins is linked to the gradual increase in the price of gold. This is due to the factor that the gold prices and ETF’s are correlated. The usage of bitcoins will lead to more amount of money being pumped in for ETF’s. When the ETRs’ demand and value are increased, this will lead to a subsequent increase in the price of gold. This is in a way profitable for the countries with large amounts of gold reserves. No doubt why many of the European nations have already started using ETF for bitcoins?
US market would get affected
The countries around the world start using ETF for bitcoins to increase the value of their gold bonds and reserves. Since the other countries in Europe and Asia have more gold reserves than the USA, if the USA also allows the usage of Bitcoin ETF, it would not be beneficial. This is due to the reason that the USA has lesser gold reserves when compared to the other countries of the world. Then the value of the USA market would fall down gradually.
Increase in value of bitcoins
Since the bitcoins have a certain cap, it is expected that the Exchange Traded Funds would certainly increase the value of these bitcoins. The Fear of missing out and hold and sell strategy involved in ETF’s plays a vital role in increasing the prices of bitcoins. When people are aware of the fact that anything when traded through the medium of ETFs’ has its own value and would increase in the value of bitcoins. More than the level of increase in the bitcoins in today’s date, it is expected to rise even more in the coming days.
The investors are on the constant lookout for different types of investment methodologies and zones which would fetch them better yields. So, this would create a better reach for the bitcoins than the usual time.
Makes it seem legitimate
Since the bitcoins are deregulated in nature, the investors don’t usually prefer to invest using bitcoins. But, if the regulating body approves the usage of bitcoins, the negative image associated with bitcoins would gradually diminish within a certain period of time. There is also a fear that persists in the minds of the regulators of the drop in the value of currencies.
Massive changes in market
The entire system of the market in the USA would face a major makeover. The makeover should be beneficial and should not affect any section of the economy. Since this is a matter associated with the entire economy, it requires a lot of attention and research.
What could the approval of Bitcoins ETF lead to?
When the ETFs’ for Bitcoins get approved, the demand for the approval of ETF’s or other types of cryptocurrencies like Ethereum would be on the charts.
The responsibility of deciding upon the ETF’s for the other cryptocurrencies would be on the rise. This is another important reason why the regulating body is thinking more than twice before providing the approval for the ETFs’ of bitcoins.
Reason for the demand
The bitcoins have always caught the attention of many as it is safer and doesn’t need a regulating authority. It is easier to acquire than the regular currencies. The idea of introducing ETFs’ for bitcoins is a bolt out of the blue for the traders. But, in the case of regulating bodies and trading corporations of respective governments, this is a steep move. The foreign exchange reserves are also keenly waiting for the final decision of the SEC.
What are the various predictions and assumptions?
This decision is being prolonged for more than one and a half years. But, it has reached the saturation levels where the regulators are in a state to make the final announcement as soon as possible.
Though a wide range of speculations is doing the rounds, anything can be affirmative only after seeing the real time results.
This is a move which has been proposed by SEC but the regulators can take time up to the month of September to announce officially. Though a statement is expected within the 15th of August. Since a finite value has been set for Bitcoins, one can look forward to a positive statement from the regulators.
These are some of the ways in which the introduction of ETFs’ could impact the market.