I want to present you with a couple of facts that, in my opinion, are very good news for bitcoin holders in the near future. I'm going to let you do your own research and thinking, let me know if you disagree in the comments.
What is a bitcoin ETF?
An ETF stands for Exchange traded fund. According to Investopedia, this means the following:
An ETF, or exchange-traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold.
To summarize, a bitcoin ETF is essentially a fund that holds bitcoin as its sole asset, and sells its shares that represent fractional ownership of the bitcoins that this fund owns on Wall St. While this is not inherently useful to most of us (if you want to invest in bitcoin it's easier and cheaper to just buy some and hold in your wallet), this is huge news for mass adoption as it opens up bitcoin investing to pension funds, IRAs, and other big-money funds that operate under tight SEC scrutiny.
Current state of bitcoin ETFs
The most prominent bitcoin ETF, and the one that's most likely to be the first to launch, is COIN, a project that's led by the Winklevoss twins. You might have heard about them before from the news, from The Social Network movie about the early days of Facebook (in the movie, Mark Zuckerberg steals their idea and is then forced to settle this matter in the court of law), and from another recent movie Banking on Bitcoin. If you haven't watched the latter one - stop whatever you're doing and go watch it now. The movie describes the early history of bitcoin, how and why it works, and why the Wall St has a love-hate relationship with bitcoin. The very same brothers are also the owners of Gemini cryptocurrency exchange.
Enough about the movies, let's get back to facts. The COIN ETF is ready to launch on a major stock exchange (BATS), and the only missing piece of the puzzle is the regulatory green flag. The twins have first filed with the SEC in February 2017. SEC, the regulating body that governs all securities markets in the United States of America, have declined their petition. The twins have filed for amendments many times since, with the latest attempt in March 2017. And that's pretty much all you can find in the news. Except for, maybe, the latest announcement in August, that the Winklevoss twins have partnered with a Chicago-based exchange to launch bitcoin futures market, which is scheduled to launch before the end of the year.
What you won't find in the news is, as usual, much more interesting. According to our sources, the people at the SEC who have repeatedly declined to issue approval to bitcoin-based financial instruments have since left the agency, citing that their values were no longer shared by Trump's administration. And the new person in charge of which ETFs get approved is... the same person that used to work for the Winklevoss twins writing up the proposal for COIN ETF.
- There's a high likelihood that a bitcoin ETF will appear on Wall St soon and will open up a way for massive pension funds to invest in bitcoin.
- There are more ETFs scheduled to be approved, increasing the odds that at least one will make it.
- A bitcoin futures market is scheduled to open in Chicago before the end of the year, which will further increase demand for the cryptocurrency.
- Current administration of the United States of America seems to be aware of blockchain and is willing to support cryptocurrencies.
- Bitcoin itself is becoming more useful since the addition of SegWit, Lightning Network, and atomic on-chain swaps.
- Bitcoin supply is regulated by code, and the cryptocurrency itself is deflationary. The utility of the bitcoin network is rising. The demand is about to grow even further.