What is Bitcoin ETF? How will it pave the way for the next super bullrun in 2024?

2023-12-26

The whole market is holding its breath waiting for a decision from the SEC with the approval of Bitcoin ETF proposals by investment funds, each signal greatly affecting the price path. So when Bitcoin ETF is approved, how will the market explode? Let's learn about the role of Bitcoin ETF to the market in this article.

What is Bitcoin ETF?

Definition

Bitcoin ETF (Bitcoin Exchange-Traded Fund) is a group of assets related to the price of Bitcoin that are purchased by funds and companies and converted into securities then listed on traditional stock exchanges instead of exchanges. cryptocurrency, making it easier for traditional investors to participate in the crypto market.

Benefit

  • Convenience: Investors through Bitcoin ETF do not need to perform operations related to buying, selling and managing cryptocurrencies, especially with creating wallets and buying and selling Bitcoin - operations that are still not really user-friendly. new user.
  • High liquidity: Bitcoin ETF allows investors to trade on stock exchanges - which are more stable and have much greater liquidity than crypto exchanges - which are very susceptible to many factors.
  • Portfolio diversification: Bitcoin ETF provides an additional option for investors, with relatively attractive returns compared to traditional markets.
  • Safety: When buying and storing Bitcoin on even the world's largest cryptocurrency exchanges such as Binane or FTX (once), users can still face the risk of asset misappropriation as in the case of by FTX. There are also many cases of personal wallets being hacked when interacting with decentralized applications. However, these cases almost do not happen with ETFs.

Role of Bitcoin ETFs

With the benefits mentioned above, Bitcoin ETF is a step forward that brings Bitcoin in particular and cryptocurrencies in general closer to traditional investors. This makes people expect that when Bitcoin ETF is approved in the world's largest financial markets, a large amount of money will flow into the strongest cryptocurrency, thereby pushing the whole market up.

At the same time, people also expect the history with Gold ETF to repeat with Bitcoin - the currency known as "digital gold".

Comparing with Gold ETF, when the first Gold ETF was listed on November 15, 2004, the price of gold from 450 USD per ounce has experienced a steady growth until now. Of course, many other economic factors have affected gold prices, but the launch of ETFs is an important turning point in attracting investment capital from financial corporations into the market.

Current status of Bitcoin ETF

In the world

Currently Bitcoin ETF has been accepted in 8 countries around the world:

  • Canada: The leading country with 6 active ETFs with a total investment capital of ~2.8 billion USD, accounting for 46.3% of the total 6.01 billion USD asset value of ETFs globally
  • Germany: 2 active Bitcoin ETFs spot with $1.13 billion
  • Other countries such as Jersey, Switzerland, Liechtenstein, Brazil, Guernsey and Australia also have ETFs operating with a total capital of more than 2 billion USD, respectively as shown in the image below.

In America

Although Bitcoin ETFs have been approved in some of the above countries, the United States is still the place that is expected and expected the most, as this country owns the largest stock market in the world. The two largest stock exchanges in the world today, the New York Stock Exchange (NYSE) and NASDAQ, form the most powerful financial market, with a market capitalization of up to 50 trillion USD.

As of January 2023, the US accounted for more than 42% of global stock market capitalization and this number has tended to increase in recent years. When Bitcoin ETF appears on the US stock exchange, it will create a huge impact on a global scale, not just affecting the United States.

In June 2021, the US Securities and Exchange Commission (SEC) officially approved Bitcoin ETF Future and the market witnessed Bitcoin's all-time highest price 5 months later, at a price of 66,000 USD. Investors expected that the SEC would soon approve a Bitcoin ETF, but that has not yet come true

The SEC continuously denies Bitcoin ETF Spot applications from many companies such as Valkyrie, Kryptoin, Wisdomtree, ARK Invest,... and many other companies. However, recently, the ETF story has been heated up again with the participation of Blackrock - the world's leading financial institution.

Many optimistic speculations are appearing in the market, expecting the SEC to approve Bitcoin ETFs, and this combined with the Bitcoin Halving expected to take place in April 2024 will start a new bullish cycle and push Bitcoin up. a new All-time High.

Learn about Bitcoin Halving here

However, there are also opposing views, such as Mike Belshe - CEO of Bitgo when he believes that the SEC will continue to reject a series of ETFs.

Conclusion

While the Bitcoin Halving can be considered the door to an “uptrend”, the Bitcoin ETF could be the hope that acts as a long-term ladder to Bitcoin's upward price path.

Let's follow our next articles closely to grasp investment opportunities as well as ensure safety when participating in the crypto market.

VNST, with the mission of providing safe, stable and convenient financial solutions for users, helping them easily participate in the financial technology market, will continue to contribute to the community to improve understanding of electricity money. electronics and blockchain technology.

Read more: 10 strategies to make money with Cryptocurrency 2024

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