December 4, 2021

How will the launch of the first Bitcoin ETF in the US affect the crypto market?

How will the launch of the first Bitcoin ETF in the US affect the crypto market?

On October 19, the first U.S. Exchange Traded Fund (ETF) based on bitcoin futures of the Chicago Mercantile Exchange (CME)Group). Bitcoin Strategy ETF from ProShares has received the approval of the US Securities and Exchange Commission (SEC) and will be traded under the ticker BITO, writes RBC Crypto.

Various companies, including ARK Investment,Fidelity Investment, VanEck, One River and others have been trying to get SEC approval to launch a Bitcoin ETF since 2013. Until now, the regulator has rejected all applications for the launch of exchange-traded funds based on cryptocurrency.

What is ETF?

ETF (exchange traded fund) are investmentfunds that form asset portfolios and issue their own shares, where each security is tied to a specific part of the fund's assets. Thus, ETFs allow you to purchase an asset without actually owning it.

In the case of the Bitcoin Strategy ETF from the companyThe ProShares fund will be pegged to Bitcoin futures, which are traded on the Chicago Mercantile Exchange from 2017. ProShares warns potential investors that the price of bitcoin futures may differ from the price of the first cryptocurrency on the spot markets.

After the start of trading Bitcoin Strategy ETF on the NYSEinstitutional and retail investors will be able to access Bitcoin (BTC) directly through a regular brokerage account, explained Gleb Kostarev, director of Binance in Eastern Europe. According to him, investors wishing to purchase the first cryptocurrency will not need to independently use the functionality of crypto exchanges and store digital assets.

Perspective for the cryptocurrency market

The launch of the first US Bitcoin ETF is important in the firstturn because this is another fully regulated instrument that allows you to invest in cryptocurrencies, says Mikhail Karkhalev, financial analyst at Currency.com crypto exchange. In his opinion, against the background of strict bans on cryptocurrencies in China, a more loyal position of the United States allows the industry to develop and grow further, despite the fact that, as in the country, there is still no legislation regulating the crypto market.

Tough measures against cryptocurrencies have begunintroduced in China at the end of May this year after the call of Vice Premier of the State Council of the People's Republic of China Liu He to tighten regulation of digital assets. Local provincial authorities began to ban the mining of cryptocurrency, and crypto business began to leave the country. In September, the PRC authorities completely banned cryptocurrency transactions, equating them with illegal financial activities.

The launch of the Bitcoin ETF is one of the most important milestones in 2021, Kostarev is sure. He believes that there will be a large influx of institutional investors into the cryptocurrency market in the near future.

Many investors who are often very distantfrom digital assets, over the past year, they have actively shown interest in bitcoin and in the cryptocurrency market in general, explained the director of Binance in Eastern Europe. According to him, many such investors from investing in cryptocurrency were stopped by insufficient regulation of the industry, a low level of trust in it, as well as low awareness of digital assets.

“The barrier that exists between potential investors and cryptocurrencies will be overcome thanks to the bitcoin ETF,” Kostarev said.

The beginning of trading bitcoin ETF in the United States actuallymeans the adoption of cryptocurrency by the regulator and permission to enter the crypto market for large institutional investors, said the head of the data analysis department of CEX.IO Broker Yuri Mazur. He recalled that Tesla was one of the first public companies to invest in bitcoin directly, but this strategy is not suitable for all organizations.

How can investors use Bitcoin ETFs?

Bitcoin ETF will be interesting not onlyinstitutional investors, but also retail, says Mazur. He explained that a cryptocurrency-based exchange-traded fund will be available on regular stock exchanges, which will greatly simplify the process of investing in bitcoin. Another advantage of the bitcoin ETF, Mazur called a lower entry threshold, since the value of one share of the fund will be significantly lower than the price of bitcoin. According to ProShares, the Bitcoin Strategy ETF will start trading at a set price of $ 40.

Investors will be able to use Bitcoin ETFs fordiversify their portfolios, since the instrument will be less risky and volatile, Karkhalev explained. According to him, thanks to the bitcoin ETF, investors will have less chance of running into fraudulent projects when trying to make money on cryptocurrency.

“Perhaps the profitability will not be as high as if you invested in HYIP in Shiba Inu, but the risks of losing all capital are significantly less,” added Karkhalev.

Where is it more profitable to buy bitcoin? TOP-5 exchanges

For a safe and convenient purchase of cryptocurrencies with a minimum commission, we have prepared a rating of the most reliable and popular cryptocurrency exchanges that support deposit and withdrawal of funds in rubles, hryvnias, dollars and euros.

Site reliability is primarily determined bytrading volume and number of users. By all key metrics, Binance is the largest cryptocurrency exchange in the world. Binance is also the most popular cryptocurrency exchange in Russia and the CIS, since it has the largest turnover of funds and supports transfers in rubles from bank cards Visa / MasterCard and payment systems QIWI, Advcash, Payeer.

Especially for beginners, we have prepared a detailed guide: How to buy bitcoin on a crypto exchange for rubles?

Rating of cryptocurrency exchanges:

# Exchange: Website: Rating:
1 Binance (Editor's Choice) https://binance.com 9.7
2 Huobi https://huobi.com 7.4
3 Exmo https://exmo.me 6.9
4 OKEx https://okex.com 6.5
5 Bybit https://bybit.com 6.3

The criteria by which the rating is set in our rating of crypto-exchanges:

  • Work reliability - stability of access to all platform functions, including uninterrupted trading, deposit and withdrawal of funds, as well as the period of work on the market and the daily trading volume.
  • Commissions - the size of the commission for trading operations within the site and the withdrawal of assets.
  • Additional features and services - futures, options, staking, NFT marketplace.
  • Feedback and support - we analyze user reviews and the quality of technical support.
  • Convenience of the interface - we evaluate the functionality and intuitiveness of the interface, possible errors and failures when working with the exchange.
  • final grade - the average number of points for all indicators, determines the place in the rating.

How will the launch of the first Bitcoin ETF in the US affect the crypto market?

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