As the practice of cryptocurrency trading solidifies into the mainstream, many are beginning to question how new digital assets will integrate with traditional investing. After much discussion, the SEC Finally approved a Bitcoin futures ETF in New York Capital exchangeBut what does this mean for traditional investors and how has it affected them?
Research to answer this and discuss the future of cryptocurrencies in traditional financial markets is Ian KingCo-Founder of the Blockchain-based Fintech Platform unbanked. After working in technology and digital media for over ten years with a heavy focus on business development, sales, and strategy, Ken looks forward to explaining the pros and cons of a bitcoin futures ETF and how it will impact the future integration of cryptocurrencies and traditional investments:
Bitcoin hit a new all-time high on October 20 after the successful launch of the ProShares Bitcoin Strategy ETF, the first ETF approved by the US Securities and Exchange Commission (SEC). Bitcoin price broke the previous record of $64,889 in April and has reached $66,685 since then. After a long stagnation with Bitcoin prices going up and down, Bitcoin has managed to extend its annual gains up to 130 percent. The new fund, which was launched on October 19, allows investors to trade in bitcoin futures without actually owning the currency. This ETF launch became one of the most successful launches ever with $570 million worth of assets traded on the first day. The fund was launched on the New York Stock Exchange under the symbol BITO, and has also seen a trading volume of $1 billion. ProShares will give investors the opportunity to be exposed to the risks and returns that Bitcoin offers without having to go through the process of buying the coins themselves. Ethereum price also rose by 7.4 percent, exceeding $4,000. On the first day, the fund’s value rose to $41.94, a 4.8 percent increase over its initial $40 NAV.
Before jumping on this bandwagon, investors should understand the difference between bitcoin contracts and bitcoin futures. Buying a bitcoin futures contract from an ETF means that you agree to buy or sell bitcoin in that future at a specified price. Therefore, you will not directly buy or sell bitcoins. Instead, you will buy or sell Bitcoin on the agreed date and price, regardless of the market price on that day. If the market price is higher than the agreed price, as an investor, you earn money by trading at a premium. And if the market price is lower than the agreed price, you lose money by trading at a discount. By investing in bitcoin futures, you are betting on bitcoin future prices. Essentially, this is the same as longing or shorting publicly traded stocks. Although investing in Bitcoin Futures will not protect you from Bitcoin volatility, it will give investors first-hand experience investing in cryptocurrencies. The new ETF will give those who have a brokerage account, and are comfortable with stock trading, a chance to invest in cryptocurrencies without having to open a crypto account with a specific provider.
A change in the position of the Saudi Electricity Company
Until recently, many financial institutions tried to get Securities and Exchange Commission (SEC) approval for Bitcoin ETFs but to no avail. The Securities and Exchange Commission (SEC) has been reluctant to do so due to the volatile nature of bitcoin and the lack of comprehensive crypto regulation. But the Chairman of the Securities and Exchange Commission, Gary GenslerHe said that Bitcoin futures contracts are more secure and the committee would be comfortable accepting them given how they work in a regulated market. This appears to be a significant change in the position of the SEC, which was earlier completely skeptical about the cryptocurrency market. Former Chairman of the Board of Directors, Jay ClaytonHe expressed concerns about the volatility of cryptocurrencies and their use by criminals in illegal activities. The Securities and Exchange Commission has long been concerned about the lack of investor protection in the cryptocurrency market, which provides criminals with greater opportunities for fraud and manipulation.
The new Bitcoin-linked ETF comes with greater investor protection – somewhat similar to traditional approaches to investments. For example, file Federal Deposit Insurance Corporation (FDIC) covers the cash balance in traditional brokerage accounts. Brokerage accounts are secured by Securities Investor Protection Corporation (SIPC), which covers up to $500,000 in the event that a brokerage goes bankrupt or if other financial difficulties arise (such as theft or hacking). This type of protection is not provided by cryptocurrency exchanges as they are likely to be more vulnerable to fraud, scams, and scandals. The number of cryptocurrency scandals increased by 1,000 percent in just one year. Therefore, any protection mechanism will give people the confidence and confidence they need to confidently invest in cryptocurrencies. Although investors can already buy bitcoin futures contracts on the regulated Chicago Mercantile exchangeIntroducing an ETF gives investors a wide range of options that will only add to the growing legitimacy of cryptocurrencies.
Cryptocurrency enthusiasts and advocates are quite pleased with the SEC’s decision and believe it is a major step in the popularization of cryptocurrency. However, there are some skeptics who believe that the Securities and Exchange Commission has complicated the whole process. They believe that if the SEC cares about investors, it should allow an ETF that can hold bitcoin rather than a future product that would confuse investors even more.
billionaire investor Paul Tudor Note that cryptocurrencies are a better way to hedge against inflation than gold. He noted that inflation was a major threat to the US economy in a post-COVID scenario. He himself admitted that there is a number one cryptocurrency in his investment portfolio. Some experts have claimed that the launch of the new ETF was a “huge move” that would add more legitimacy to the crypto space. It will give a boost to many investors who previously felt uncomfortable investing in cryptocurrencies based on the beginning of the market and its systems as a whole.
The success of BITO will also encourage other investment funds interested in cryptocurrency to list their EFTs. Other ETF Providers Like InvescoAnd VanEckAnd Valkyrie And digital galaxy It is likely that it will launch its own Bitcoin ETFs soon, depending on the approval of the Securities and Exchange Commission. However, the SEC also acknowledges that investments in bitcoin futures may not directly increase demand for cryptocurrencies. Alternatively, investors can buy Bitcoin Futures to protect themselves from unexpected price changes or to take advantage of price discrepancies. Both will help improve the consistency of bitcoin’s value. With this move, it appears that more legitimacy and institutionalization of cryptocurrencies may only come from the mainstream financial markets where people have a greater degree of confidence in them. This could serve as an important starting point for the mainstream adoption of cryptocurrencies by the masses.