Future Approval of First-Ever Bitcoin ETF will Change Entire Cryptocurrency Ecosystem
The concept of a Bitcoin ETF has long been one of the most sought-after potential future of the crypto markets. An ETF is an Exchange-Traded Fund, and it could be the key to the entrance of far more institutional players into the growing industry and its exchanges. ETFs allow traders to bet on the outcomes of any given price trend in Bitcoin without physically holding the volatile cryptocurrency.
This could help to solve one of the most significant problems barring the large-scale institutional adoption of cryptocurrency by the biggest players in the game: a lack of faith. Big investors are enticed by security and liquidity, two things which the current cryptocurrency industry, a proverbial wild west of financial asset trading, simply might not be able to provide. When an institutional investor wants to hold the currency, they would be taking the risk of volatility, hacking, or the crashing of the relatively new exchange in which they place their funds.
Still, institutional investors are beyond interested in the prospect of making billions off of the crazy world of cryptocurrency, especially the massive Bitcoin. The volatility of the cryptocurrency markets is dangerous, but can also provide the savvy institutional player with the perfect conditions to facilitate a high-risk, high-reward trading portfolio.
Bitcoin Boom Time
Following a Bitcoin ETF, experts predict that the price of the asset could skyrocket following the acceptance of an exchange-traded fund for Bitcoin. A comparative example from which some analysts draw their potential gains comes from 2003, when the price of gold jumped significantly when there was introduced an exchange traded fund for the commodity. Following this decision, the ETF market for gold exploded, and its original host, GoldShares by SDPR, is worth over USD $35 billion.
Crypto professionals speculate that similar gains would be seen by the Bitcoin market if the SEC were to finally accept one of the hundreds of potential offers from private entities looking to create a Bitcoin ETF for their clamoring institutional investors. The introduction of more institutional money from big Wall Street names would surely occur following an ETF proposal acceptance by the SEC, and this could mean major changes for the crypto space, including a bullish market for Bitcoin.
A History Of Failures
The road to a Bitcoin ETF has not been an easy one. So far, the SEC has not accepted one of the many cryptocurrency (Bitcoin) ETF proposals in the past two years. Though they have occasionally postponed a decision rather than immediately choosing to reject, the regulator has been slow to embrace any offer by a major company to create the profitable Bitcoin ETF.
One of the biggest problems barring the SEC from accepting a BTC ETF proposal is their outlined problems with the security involved in the process. In order to submit the golden successful ETF proposal, a company needs to be able to convince the SEC that their proposal has a way to keep the funds of institutional investors safe, while still allowing them to securely invest in the cryptocurrency.