Bitcoin ETF

In traditional markets, an Exchange Traded Fund (ETF) is a managed fund that tracks indexes or commodities. It is a form of a passive way to invest where you are not attempting to beat market returns rather take a slice of the return that the market is offering as a whole. The ETF options include indexes like the S&P500 or the ASX200 or commodities like agriculture and precious metals, with the leading commodity being gold. With the rise of Bitcoin and its narrative as digital gold, it is not much of a stretch to assume that a Bitcoin ETF is only a matter of time where it’s not if, but when one will be approved. Individuals would then be able to invests in a Bitcoin ETF rather than directly buying btc through an exchange. The view is that it will assist to onboard millions of investors that are currently on the side-lines watching the bitcoin ecosystem develop but haven’t taken the leap due to a perceived high risk with storage and making sure the bitcoin holdings are secure. There are many trusted crypto exchanges that take the custodial obligations very seriously and have bank vault type security with a combination of hot and cold wallets for maximum protection against hackers. If individuals aren’t comfortable with holding their bitcoin with a third party, they may choose a cold wallet storage option for themselves. These options however require a higher level of technical knowledge to ensure the private keys are known only by the user as well as being kept safe and secure. A Bitcoin ETF will give investors piece of mind that there is no exchange risk or technical risk as they are not directly buying bitcoin themselves. Furthermore, ETFs are understood more than digital currencies and investors already have an appetite for them giving the existing equity and commodity ETFs. There have been many applications to the Security and Exchange Commission (SEC) but to date, no digital currency ETFs have been approved. The Winklevoss twins, Tyler and Cameron attempted to launch a Bitcoin ETF in 2017, however it was unsuccessful. More recently, Mike Novogratz of Galaxy Digital has submitted an application to the SEC. Novogratz is known for having billionaire status prior to the 2008 GFC, however like many hedge funds around that era, lost a substantial chunk of his wealth as a result of the financial market turmoil. He has since regained his billions and is a well known bitcoin bull as a leader in the Bitcoin ETF space. One day in the near future, people may be able to use their quarterly SG contributions to invest in bitcoin superannuation ETFs.    

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: