With so much recent news and hype surrounding the possibility of a "Bitcoin ETF", I thought it would be a good idea to cover exactly what an ETF was and how it basically works, along with how a Bitcoin ETF might affect the price and current movement of Bitcoin in general. I also take a look at the current standing with the SEC and when we will be getting a decision one way or another. Follow The 'Stache as we dive into what is a Bitcoin ETF!
The ETF Breakdown
First, we need to understand what an ETF is before we can really understand why a Bitcoin ETF is a big deal. ETF stands for "Exchange Traded Fund" which means that it is a security that tracks a fund or "bundle of assets". Similar to a mutual fund in some ways, and ETF gets traded just like a stock does. This makes it prone to daily price fluctuations, but is a great vehicle for traders as there is high liquidity and low fees.
The ETF fund itself actually OWNS the underlying asset and then divides that asset up into individual shares. This gives investors the opportunity to invest in the asset without having to actually hold it themselves. Basically it is an indirect way to invest in something without having to manage it or hold it yourself.
A Bitcoin EFT To The Moon
If you have spent any time in crypto you know that buying, selling, and even HODLing can be a difficult task and something you must truly learn about. Institutional investors don't want to do that so you can see why having an ETF, where they don't need to worry about any of that, is VERY appealing to larger investors.
The SEC Approval Of An ETF
As I talk about in the video, the SEC has opened things up for comments, but now needs more time to decide on this. You can read the official documents filed and the comments already submitted here:
Watch the video to see what I think about exactly how this will play out and my comments on the whole process so far. Are you a BTC bull ready for this to send us to the moon, or are you looking at shorting Bitcoin thinking the CBOE will be denied it's Bitcoin ETF yet again? Leave me some comments below, but until next time...