While it may well help the industry to be open to more investment through ETFs, the industry should focus on creating real use cases and adoption, rather than the symptomatic rise in price that they cause.
Could not agree more with this one. Actions like this do make prices rise, but usually rise is because of speculations and not because of intrinsic value. And because of that we get price drops like current one and panic on the market
Do you really think that the approval of an ETF would do anything to the price in this situation?
Hey Nightz, welcome to the DNotes forum!
My response to your question would be that the effect of Bitcoin ETF's on the market would be difficult to quantify. That said, there are a couple of things I'm certain that they would do.
1. They would make it easier for people to trade Bitcoin on well respected and more reliable exchanges, where all the really wealthy people and institutional investors play the market.
2. The security of the bitcoin will fall to the fund and not the investor, which will give these big players & more risk averse people a sense of security when it comes to theft and fraud.
Both of these things will boost the liquidity and legitimacy to the markets, and make investors feel safer buying Bitcoin, rather than having to go to small exchanges with histories of getting hacked, and then transferring money to it, then sending the Bitcoin somewhere for storage, creating a paper wallet etc. There are a lot of things that can go wrong to a non-technical person who has never done it before. It works the same way when they want to sell their Bitcoin. They would need to send their Bitcoin to the exchange (which could take 30mins), and hope the liquidity is there to sell without a big price drop etc. ETFs are supposed to solve this issue. And individuals can much more easily track the current value of their portfolio at the fund.
If there is a lot of demand for the ETF shares, then the price of those shares will trade higher than what the Bitcoin spot price is, and the fund will then go into the markets and purchase more Bitcoin (which raises Bitcoin price). It basically opens Bitcoin up to everyone who has money so that they can trade Bitcoin in the same way that they are used to trading everything else that they are already trading.
For all we know, ETF's could make the demand for Bitcoin and other cyptocurrency assets rise exponentially. Not necessarily immediately, however