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Author Topic: Bitcoin ETF. All questions answered. Why, when and who will get ETF approved?  (Read 109 times)
a298b112 (OP)
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June 30, 2022, 06:39:28 AM
Merited by DdmrDdmr (3)
 #1

So there is a lot of noise about Bitcoin ETF. And now Grayscale is going to court on SEC as they get rejected again.

1. What is Bitcoin ETF? How does it work?
2. Why is so important?
3. What will it do to the market?
4. Why people are waiting for it? ( it seems it should make big news)
5. Why people can't just buy BTC instead of BTC ETF?

Thanks.

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June 30, 2022, 10:51:16 AM
Last edit: June 30, 2022, 03:50:50 PM by bitmover
Merited by ETFbitcoin (1), ImThour (1)
 #2

There is a lot of fuzz about this recently.

What I can see, is that it is not that important to get an ETF approved.

1. What is Bitcoin ETF? How does it work?

It is just a financial instrument to allow people to buy bitcoin directly from a stock exchange, such as nasdaq. As if it was a stock

Quote
2. Why is so important?

For bitcoin network, it has zero impact. It is not important.

Quote
3. What will it do to the market?
4. Why people are waiting for it? ( it seems it should make big news)

People are waiting for it because it will most likely pump the price. There are a lot of regulations which doesn't allow some institutions ti buy btc directly (such as pension funds), but they can buy an ETF.

As instituional money has a lot of volume,we will somehow see a spike in the price.

Quote
5. Why people can't just buy BTC instead of BTC ETF?

People can. A bitcoin ETF is most likely a financial instruments for institutional investors, or people who doesn't really want to worry about private keys.

a298b112 (OP)
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June 30, 2022, 11:33:52 AM
 #3



People are waiting for it because it will most likely pump the price. There are a lot of regulations which doesn't allow some institutions ti buy btc directly (such as pension funds), but they can buy an ETF.


So Bitcoin ETF is 'synthetic asset' that tracks Bitcoin price. However, when you buy ETF you don't buy BTC. Now the question is why pension funds can't buy real BTC, but they can buy its imitation? :-)

And why SEC refuses to approve ETF? Is there any ideas why they don't want to approve it?
Rizzrack
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June 30, 2022, 12:29:58 PM
 #4

So Bitcoin ETF is 'synthetic asset' that tracks Bitcoin price. However, when you buy ETF you don't buy BTC.

There you go, you got the idea  Wink

Now the question is why pension funds can't buy real BTC, but they can buy its imitation? :-)

Financial institutions have some predetermined portfolio possibilities, dictated by the country's financial regulator. For example last year in Germany BaFin (the german SEC) said it would allow pension funds to hold up to 20% of their assets in crypto. Not sure if this is currently the case but there were some talk about it at least. Tho it wouldn't be actual crypto, but ETP (exchange traded product)

They keep mentioning about the volatility of crypto assets (fair point) but it's not as if stonks are not volatile. -20% is the new normal for SP500 at least this YTD. So this does not hold water anymore.


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June 30, 2022, 12:39:10 PM
 #5

Bitcoin ETF is a tool to make Bitcoin becomes more attractive in non-crypto guys. However, I don't see the point why they don't like Bitcoin and still want to buy it via Bitcoin ETFs. It is like when you hesitate to create your Bitcoin wallet, buy and move it to your wallet but you create an account on third-party platform, and buy Wrapped BTC that is not real Bitcoin.

Bitcoin ETF is another way to make noise but it does not affect Bitcoin network and on-chain transactions so much. In fact, if there are more demands, there would be more transactions and the network will have more waiting transactions in mempool. In future, with Segwit, Taproot, Lightning network adoption and more upgrades, Bitcoin network will have better capacity to handle transactions.

Bitcoin ETF Race from Arcane research.

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June 30, 2022, 12:58:49 PM
 #6

There's nothing more pointless than a bitcoin ETF.

Those who want to buy or sell bitcoin can just use an exchange, either CEX or DEX. It is entirely ironic to treat investment certificates as the asset, when the asset's software is already run by individuals, forming a network that works 24/7/365, allowing property rights to transfer with no intermediaries.

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June 30, 2022, 01:17:07 PM
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So Bitcoin ETF is 'synthetic asset' that tracks Bitcoin price. However, when you buy ETF you don't buy BTC. Now the question is why pension funds can't buy real BTC, but they can buy its imitation? :-)

For the same reason they can buy a gold etf, but they can't buy a bar of gold and store it at someone's office.

Technically,  an ETF is certificated by SEC and they are more audited and secured to actually have all the bitcoins they are saying, following strict rules and regulations.

There's nothing more pointless than a bitcoin ETF.

Those who want to buy or sell bitcoin can just use an exchange, either CEX or DEX. It is entirely ironic to treat investment certificates as the asset, when the asset's software is already run by individuals, forming a network that works 24/7/365, allowing property rights to transfer with no intermediaries.

I don't think a bitcoin ETF is pointless.
It is important for some kind of investors, but basically don't apply to us. We are not that kind of investor.


It doesn't add anything to the network or the protocol, but it will make more people exposed to bitcoin price.

In Brazil we have already 2 bitcoin etf already. They are not good for people who hold btc. There are more taxes for an etf than for cryptocurrencies,  and we can't sell it p2p.

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June 30, 2022, 01:30:59 PM
 #8

I don't think a bitcoin ETF is pointless.
Describe one benefit a corporation gains from buying bitcoin using an ETF. Here are a few reasons not to:

  • It's more expensive. Buying P2P means there are no intermediaries involved, hereby it's cheaper.
  • You don't get the asset. You only get a liability, which is reasonable if you want to acquire a part of a company, but can't be more irrational for something that promotes self-custody and censorship resistance.
  • It's not transparent. You don't get to verify if the bitcoin-contracts are actually pegged to real bitcoins.

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June 30, 2022, 02:08:22 PM
 #9

...when the asset's software is already run by individuals, forming a network that works 24/7/365...

ETFs, since they are traded on the stonk market, would be traded only within market hours ... I guess.
Hope it doesn't crash at night  Cheesy

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June 30, 2022, 02:18:31 PM
 #10

So Bitcoin ETF is 'synthetic asset' that tracks Bitcoin price. However, when you buy ETF you don't buy BTC.

That's correct. However, from my knowledge, there can be 2 types of BTC ETFs, of which one makes the ETF actually properly backed with Bitcoin (the entity emitting the ETF have to have that amount of BTC), and the other is not.
My guess is that most people think that all ETF are backed by BTC, hence this instrument could create a buying pressure on the actual bitcoin markets. (And a rise of the price).

Now the question is why pension funds can't buy real BTC, but they can buy its imitation? :-)

I think that Bitcoin has fuzzy legislation on how to do bookkeeping on those acquisitions and many are afraid of that.
Many don't trust the crypto exchanges and businesses, simply because they're very new (and some are also somewhat anti-banking).

So working with USD and with companies you know and trust is a big factor for many.
Even more, keeping your bitcoins safe, as you know, it's not trivial.

So it's a decision I can understand.

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June 30, 2022, 03:47:32 PM
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Describe one benefit a corporation gains from buying bitcoin using an ETF.

Due to regulations, it might just be the only option available.

Like the classic example of pension funds.

It is better to buy bitcoin directly, but that option might just not exist.

Now the question is why pension funds can't buy real BTC, but they can buy its imitation? :-)

I think that Bitcoin has fuzzy legislation on how to do bookkeeping on those acquisitions and many are afraid of that.
Many don't trust the crypto exchanges and businesses, simply because they're very new (and some are also somewhat anti-banking).

So working with USD and with companies you know and trust is a big factor for many.
Even more, keeping your bitcoins safe, as you know, it's not trivial.

So it's a decision I can understand.


it is not reasonable that the owner of the pension funds keeps billions of usd in bitcoin in his hardware wallet.

a bitcoin etf will follow strict regulations so that there is no wat for the funds to get hacked or lost or stolen by the owner of the private keys.

jsut like he cant buy gold directly (in most cases afaik) but he can buy a gold etf.

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June 30, 2022, 05:28:55 PM
 #12

Due to regulations, it might just be the only option available.
If a bitcoin ETF is officially an option in a country, it means there's a legal framework for bitcoin. But, if there's a legal framework it's better to directly buy bitcoin, and state it normally to the tax office. If there's no legal framework, there can't be any option to buy bitcoin legally.

In other words, an ETF can't be the only option available, because it doesn't make sense to legalize liability of bitcoin, but not bitcoin itself, and if you do, it doesn't make sense to buy a liability of bitcoin when you can have much more benefits by acquiring the asset.

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July 03, 2022, 09:10:40 AM
 #13

So Bitcoin ETF is 'synthetic asset' that tracks Bitcoin price. However, when you buy ETF you don't buy BTC. Now the question is why pension funds can't buy real BTC, but they can buy its imitation? :-)

And why SEC refuses to approve ETF? Is there any ideas why they don't want to approve it?
Well, I would like to share my knowledge regarding this topic!

Explaining in a general way, an ETF is nothing more than an index fund, and the investor will be exposed to the fluctuations of these assets within an ETF.

I will cite an example to clarify better.
In a box of chocolates, we have different flavors (grape, milk, strawberry, banana and others), in a crypto ETF, it can be composed of 70% BTC, 10% ETH, 10% LTC, 5% ADA and 5% SOL, if these cryptoassets appreciate you will make a profit, but if they depreciate, you lose.

Sometimes institutions cannot buy crypto assets directly, but can invest in crypto ETFs. (depends on your regulation)

There are several investors who know Bitcoin but do not have enough knowledge to invest in crypto but purchasing an ETF he will be exposed to cryptocurrencies, even if indirectly.

Most investors are creating expectations regarding the Bitcoin ETF, there will possibly be a great demand for this investment and consequently the value will inscrease.

.
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