The United States finally has the first Bitcoin ETF.
On Tuesday, the US’s first Bitcoin ETF (Exchange Traded Fund, “Stock Index Fund”) launched by the asset management company ProShares was listed on the New York Stock Exchange. The price rose 4.9% on the first day and the transaction volume was nearly 1 billion U.S. dollars. Became the second largest fund with the largest transaction volume on the first day in history.
In the following two days, the US Securities and Exchange Commission (SEC) approved the Bitcoin ETF launched by two asset management companies, VanEck and Valkyrie. More than ten other asset management agencies are also waiting in line for the SEC to review similar products.
The market generally believes that this is a key step for cryptocurrency to move further towards compliance and mainstream. Optimism is directly reflected in the trend: Bitcoin hit a record high of nearly $67,000 on Thursday.
In fact, the ETF listed on Tuesday is not the number one in the world. In February of this year, the Bitcoin ETF was listed and traded in Canada, but it did not arouse widespread discussion and market enthusiasm. A relevant person in charge of a cryptocurrency market maker with an important market share told LatePost that no one cares about Canada, “other countries are not important, except the United States.” After China took a crackdown on Bitcoin transactions, the United States and the U.S. dollar gained overwhelming weight in the cryptocurrency market.
The reason why Bitcoin ETFs have attracted much attention is also related to the form of trading: ETFs can be listed directly on stock exchanges, which are convenient and flexible to trade, and theoretically have low thresholds. In comparison, the “Grayscale Bitcoin Trust Fund” (hereinafter referred to as GBTC) issued by Grayscale Corporation in 2013, although it also provides a compliance channel for participating in cryptocurrencies, it sets a minimum investment threshold of US$50,000.
The bigger problem with GBTC is that it can only enter but not exit, that is, investors can buy GBTC shares from Grayscale in the primary market, but when they want to withdraw their funds, they cannot redeem them directly in the primary market. They can only go Selling in the secondary market brings investors a trading risk that the price in the secondary market may be lower than the price in the primary market.
This defect prevented sovereign funds and other deep pockets with large plates and long cycles from investing in GBTC. The current listed Bitcoin ETF has improved this shortcoming and is considered to be beneficial to attracting more mainstream institutions’ large capital to enter the market.
The more important significance of the Bitcoin ETF listing is the change in US regulatory attitudes.
Since 2013, asset management agencies have successively promoted the listing of Bitcoin-related ETF products, but they have all been rejected by the SEC. After the gray company that issued GBTC applied for a Bitcoin ETF and failed in 2017, the SEC explained their concerns: how to ensure the liquidity of fund products? How to value cryptocurrency? How to supervise potential fraud and market manipulation risks? The SEC believes that Bitcoin-related ETFs should not enter the market until a series of issues are resolved.
But starting in 2020, Bitcoin has shown strong growth and resilience: Although it has encountered some policy blows in the middle of this year, the “blood back” of Bitcoin has been relatively rapid this time, and the total market value has now reached 1.2 trillion US dollars, ranking among the world’s top Top ten assets.
Gary Gensler, who was newly appointed as the chairman of the SEC in March this year, also brought more positive factors to Bitcoin compliance. He once taught blockchain-related courses at the Massachusetts Institute of Technology. The industry believes that his being the chairman of the SEC is the result of some market demand accumulation. One month after Gensler took office, Coinbase, the largest cryptocurrency exchange in the United States, was listed on NASDAQ.
The SEC, whose important goal is to protect the rights and interests of investors, is willing to allow Bitcoin ETFs to be listed at this moment, which means that regulators are gradually recognizing the asset attributes and investment value of Bitcoin.
However, this value is currently closer to professional institutional investors. This is not the spring for ordinary retail investors.
Because the Bitcoin ETF currently approved by the SEC for listing is a futures ETF rather than a spot ETF. In terms of transaction risk and difficulty, futures are actually larger than spot. An obvious difference is that futures can be leveraged, so the fluctuations of ups and downs are greater.
Even some veterans are watching: Cathie Wood, CEO of the Ark Fund, which has always been optimistic about Bitcoin, publicly stated that she has not bought the first US Bitcoin ETF, saying that she is carefully studying issues such as futures premiums and spot premiums.
Tyrone Ross, CEO of Onramp Invest, an encrypted asset management technology company, believes that Bitcoin futures ETFs are not suitable for ordinary investors. This means that entering the riskier futures market requires professional knowledge and trading experience. Some of ETF’s gameplay, such as the use of its arbitrage in the primary market and the secondary market, is a large investment and high-tech activity that has no chance with ordinary individual investors. The real benefits are hedge funds that have experience in futures trading. , Quantitative funds with programmatic trading technology and experience.