Bitcoin’s price is surging, with some attributing the increase to the SEC’s recent approval of a Bitcoin ETF.
Exchange-traded funds, such as the Bitcoin ETF, enable investors to purchase shares that reflect a digital asset without having to deal directly with the cryptocurrency. It’s not yet possible to get one in the United States since the Securities and Exchange Commission has repeatedly denied applications for the product because to worries about price manipulation in the crypto market.
A Long Hoped for Goal in the Cryptosphere
A Bitcoin ETF has long been a dream of the crypto sector, and when it is finally authorized by the Securities and Exchange Commission (SEC), it is expected to lead to a flood of institutional money into the crypto market, driving the price of Bitcoin even higher.
In two weeks, on Oct. 18, there’s a strong possibility the Securities and Exchange Commission will approve a Bitcoin ETF. It’s important for investors to keep in mind that this is just a future-based Bitcoin ETF according to Nate Geraci, president of The ETF Store and Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.
2 weeks from tomorrow, the first US-listed bitcoin ETF (unfortunately, futures-based) could be approved.@EricBalchunas says 75% chance bitcoin ETF approved in Oct.
Time to get everyone on record. Yay or nay?
I say yes, though if doesn’t happen we may be waiting til like 2025.
— Nate Geraci (@NateGeraci) October 3, 2021
According to Geraci’s research, earlier in the day Balchunas predicted that there will be an approval for the ProShares Bitcoin Strategy ETF on October 18th, with a 75% probability. Balchunas added that according to Bloomberg Intelligence, the chances are 2-1 that it would be authorized first.
What is an ETF?
Unlike a normal stock, an ETF is traded on a stock market and may be bought and sold just like any other investment. It follows an index, sector, commodity, or other asset. Anything from the price of a single commodity to a vast and varied collection of assets may be tracked by an ETF. You may even arrange your ETFs to follow a certain investing strategy, like a mutual fund.
Like a stock, an ETF is a collection of assets that trades on a market. As the ETF is bought and sold, its share price fluctuates continuously throughout the day, unlike mutual funds, which only trade once a day after the market closes. In addition to equities and commodities, ETFs may hold a variety of other assets, such as bonds. Some ETFs exclusively include investments from the United States, while others are global in scope. In comparison to buying equities one at a time, ETFs have lower cost ratios and need less brokerage fees.
The SPDR S&P 500 ETF (SPY) is a well-known example since it follows the S&P 500 Index. All of these kinds of assets are included in ETFs, as well as a combination of them. An ETF is a marketable investment, which means it has a price and can thus be purchased and sold easily.
Like stocks, ETFs are exchanged on a stock exchange, thus the name “exchange-traded fund”. Because ETF shares are bought and sold on the market during the trading day, their price changes. The mutual funds, on the other hand, don’t trade on a market exchange and only trade once a day after the markets have closed. When compared to mutual funds, ETFs are less expensive and more liquid.