Bitcoin Futures ETF, the hottest topic in the cryptoverse of late that sent the price of BTC soaring above $60,000, at the time of writing this. With Grayscale confirming that they will be filing for GBTC to be converted to a spot Bitcoin ETF, the future of crypto looks nothing less than exciting indeed!
Bitcoin Strategy ETF (BITO), a Bitcoin futures exchange-traded fund (ETF) from ProShares, is set to debut on the New York Stock Exchange (NYSE) Tuesday. With this, the world’s first regulated Bitcoin investment vehicle will become available for mass investments in the United States. This move will help Bitcoin become part of the $6.7 trillion ETF industry.
Considering that it took ten years for the US regulators to approve and allow a crypto asset to be traded on the exchanges of the classical financial market, it is a milestone and we can understand why the cryptoverse is excited.
But just what is an ETF and what is the difference of a Bitcoin Futures ETF? What are the possible impacts this could have on the overall crypto market?
Disclaimer: Our content is intended to be used and must be used for informational purposes only. It is very important to do your own research and analysis before making any investment based on your personal circumstances.
What is an ETF?
If you are from the legacy market, you will be familiar with an ETF. After all, it has been part of the world of traditional finance for a long time and there is a chance you could easily understand what we are going to discuss today on the subject of ETFs.
Sometimes also called a tracker, ETF is an exchange traded fund; that is to say a fund that will replicate the performance, most often of an index. Indeed, the most traded ETFs will mimic an index such as the American SP500 for example, or the German DAX30. In short, ETF allows investors to diversify their investment without directly owning the assets. One of the benefits of this is – without direct exposure to the assets, investors will not have the worry of complex storage and security procedures, especially for the large institutional investors.
With ETFs, it can also replicate the performance of an industry or sector, such as pharmaceuticals, a currency or a commodity such as oil. Mostly, they trade on traditional market exchanges rather than crypto exchanges.
The Bitcoin Futures ETF - what is the difference?
It is important to understand that investing in a futures-based bitcoin ETF is not a direct investment in bitcoin.
A futures-based ETF tracks futures contracts, rather than the price of an asset. As a result, a futures-based bitcoin ETF would track bitcoin futures contracts, not the price of bitcoin itself. Therefore, the price of the ETF will not match the price of bitcoin. Hence, the price of a futures-based bitcoin ETF could trade at a premium during a bull market or at a discount during a bear market.
ETFs are not new
The first ETFs on BTC are Canadian and it’s available on the Toronto Stock Exchange. For those of you who are interested, their tickers are BTC and EBIT.
ETFs for cryptos, for those of you who have been in the market since at least 2017, we’ve heard of them before and more than once. Indeed, since the last bull run and during the bear market that followed, every application for an ETF was seen as the key element that would bring institutional capital to the market.
Despite the absence of an ETF prior to this, it has not stopped institutional capital from flowing into the market and fueling the bull market we are in. Even better, big private companies have started to buy BTC like Microstrategy and Tesla, with more to join the list.
Try our SMART Bots 7 - days free
Experience the power of automated crypto trading with our superior trading system at the pack level of your choice
An impact for the crypto market?
As you have understood, the crypto market has not waited for the appearance of ETFs to become a little more mainstream. However the launch of a Bitcoin ETF could indeed be easier for those who find the current process of getting involved in crypto difficult or unsecure.
Currently, the process of creating an account for investing in crypto still seems a bit cumbersome or unsecure for some of us and having the possibility to expose oneself to the market through the traditional way is undoubtedly excellent news to some.
As for whether this will have a real impact or if it is ultimately just a consequence of a market that is gaining maturity, only time will tell!
An easier way to trade crypto (even if you have no experience!)
The cryptoverse can be complex and overwhelming for the newcomers. To help you simplify things, 4C Trading has developed the SMART Bots that trade on automated algorithms round the clock.
With a total of three SMART Bots – BTC, ETH and LINK, you just need to set up the accounts on 4C Dashboard, Binance Spot market, link the APIs and the bots will buy and sell automatically on your behalf. There is absolutely nothing else you need to do but to sit back and enjoy accumulating the gains. Perfect for those who prefer to use their time wisely rather than monitoring the crypto market all day and night!