Bitcoin doesn't need an ETF

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Currency Bond

This week, the SEC published a 112-page report rejecting a bitcoin ETF application filed by Bitwise and NYSE Arca. The application, which was submitted on January 9, ended in failure, but Bitwise stated that this is a constructive step in the history of cryptocurrencies and will continue to apply when the time is right.

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What are ETFs?

Before explaining why the currency circle pays so much attention to ETFs, we must first understand what ETFs are.

The full name of ETF is Exchange Traded Fund, Exchange Traded Fund. This is an index fund issued by a fund company.

ETFs include stock ETFs, bond ETFs, commodity ETFs, and currency ETFs. Take the stock ETF as an example, which contains a basket of stocks, which can be understood as a package. When a user invests in an ETF, it is equivalent to purchasing each product in the package. Such a basket of stocks can effectively prevent investors from stepping on thunder and disperse risks. Moreover, buying this package is equivalent to buying the entire sector, saving time in researching each stock.

As a kind of fund, ETF needs to be reviewed by the SEC when it is listed in the United States. Therefore, Bitcoin must also go through inspection when applying for an ETF. It should be noted that since ETF is an index fund, buying Bitcoin ETF products is not directly buying Bitcoin, but the price of the purchased cryptocurrency itself, so buyers do not need to consider the security and legality of holding Bitcoin sex. As an investment tool, ETF is also convenient for users to short, which is more flexible.

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Why are you keen to apply for Bitcoin ETF?

ETFs only have a history of more than 20 years. Due to their cost advantages and diversified options, they have become an important part of investors' investment portfolios. Almost every year, dozens or hundreds of ETFs are issued around the world.

If the Bitcoin ETF can also be listed and circulated, it means that it is recognized by mainstream supervision, and this weight is self-evident. At the same time, the issuance of ETF can bring Bitcoin to the public eye and lower the threshold for public participation. Users do not need to go to a special digital currency exchange to invest, but can directly buy ETF. It is also a compliant channel for institutional investors, and traditional funds can also invest in Bitcoin. Since buying ETFs does not hold real bitcoins, buyers will not worry about risks such as theft and hacking.

So this is also an important reason why everyone is so looking forward to the adoption of the Bitcoin ETF. With the price of the currency constantly fluctuating, the halving market is indefinite, and it is even difficult to stand above 10,000 US dollars in the short term, the currency circle urgently needs some external stimulation to start the bull market.

In the past six years, institutions have continuously submitted ETF applications to the SEC, but without exception, they have not been approved.

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The reasons for the SEC’s refusal have hardly changed, nothing more than concerns about Bitcoin’s fraudulent and manipulative behavior, low liquidity, and transactions that will occur in places that are not regulated by the United States.

Does Bitcoin really need an ETF?

Now that we have been rejected repeatedly, we have to think about a question, does Bitcoin really need an ETF?

For gold, gold ETF high-frequency trading is more convenient, because the spread of buying and selling paper gold is relatively large, and the handling fee for realizing physical gold is also high. However, gold ETFs need to pay commissions to brokers. At the same time, during the holding period of the fund, the fund company will extract 0.6% of the annual operating expenses from the assets.

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Bitcoin does not need to wait for others to "take over"

This year, the much-anticipated Bakkt exchange went online. As the first exchange to use spot delivery, it was also known as the savior of Bitcoin before it went online. Traditional currency exchange. Although the daily trading volume has reached 200 BTC, it is still two orders of magnitude behind the mainstream currency exchanges. Will the Bitcoin ETF have such a dull reaction after it goes online?

Everyone is looking forward to ETF, nothing more than looking forward to lowering the threshold for outsiders, making it easier for others to enter the market and "take orders", which in turn will promote a sharp rise in currency prices. In December 2017, the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) successively launched Bitcoin futures contracts, which did push Bitcoin up to $20,000, but what happened afterwards? Bitcoin plummeted, losing more than 80% of its market value.

The current Bitcoin is different from gold. The consensus of gold has existed for thousands of years. It is rare, easy to store, and easy to divide to make it a commodity that acts as currency. It has already measured the value of other items in the era of ancient Rome and ancient Egypt. From the 16th to the 19th century, the gold and silver standard system was gradually formed in various countries. Under this premise, the launch of gold ETF led to higher gold prices.

And what about Bitcoin? The consensus of Bitcoin comes from the guarantee of cryptography, which is the endorsement of non-sovereign countries, and its value comes from the recognition of investors, not the hype of speculators. For bitcoin value investors, opportunities to invest in bitcoin are everywhere, and there is no need to wait for the bitcoin ETF to go online.

It is a speculative behavior in the circle to expect ETF to boost the price of Bitcoin. Facts have proved that the bubble brought about by speculation will not last long, and Bitcoin may not necessarily bring buying like gold in the absence of a general consensus. Instead of waiting for the adoption of the Bitcoin ETF, it is better to wait for Bitcoin to be recognized by more people.

Bitcoin is not a pyramid scheme. To expand the consensus, you don’t need to advertise to others that you can get wealth and freedom by buying Bitcoin, but recognize its value after recognizing the advantages of Bitcoin.

Those who are outside the market have a clear understanding of this point: large bitcoin transactions of more than 500 have always been a seller’s market, and there will always be a large number of mysterious buyers with deep pockets waiting to buy coins, and as long as sellers are willing to sell, Intermediaries are bound to swarm.

The prosperous secondary market transactions, especially the secondary market transactions that are one or two orders of magnitude larger than now, actually depend on the expansion of its own scene. Bitcoin has gone from worthless at the beginning to 10,000 coins to buy two pizzas, WikiLeaks accepts Bitcoin donations, the dark web accepts Bitcoin payments, and now the United Nations accepts Bitcoin donations. The consensus of Bitcoin continues to expand, and the value Also getting higher and higher.

Bitcoin has been implemented in a down-to-earth manner. One more merchant accepting Bitcoin payment, one more Bitcoin technology developer, and one more Lightning Network node are much more meaningful than one more etf deposit channel.