We will find out step by step
What is ETF ?
The ETF (Exchange Traded Fund) is a form of fund investing in the index. The ETF portfolio consists of structured securities at each fund's level. Accordingly, investors do not have to choose their own shares that can directly buy fund certificates of the ETF. This type of investment is passive investing.
Let's take the example of gold for simplicity (and also for Bitcoin). A gold ETF would buy a lot of gold and then make investment papers, divide it into shares and sell it to the people. People who buy a stake in ETF gold mean they buy their shares in gold investment funds rather than they own gold.
By this way, people who want to invest in gold can avoid the risk of loss of money, the cost of preserving gold and the complex taxation of buying real gold, instead they can buy shares in ETF funds. gold. Since they are just gold shares, they do not have to have big capital. So with enough capital and avoiding cost categories, ordinary people can completely invest in gold, thanks to the ETF.
Impact of ETF funds to gold
Since 2003, the Rothschilds and several German banks have introduced ETF gold, offering gold investors the opportunity to invest. They collected a lot of gold and made gold shares for sale to the people.
Since then many gold ETFs have started to appear, they are beginning to collect large amounts of gold in the world. Gold is becoming increasingly scarce as buyers are increasingly unable to find the gold they need (as most ETFs have already accumulated), and they can not buy from ETFs because they only sell certificates rather than gold. real. And according to the legendary supply-and-demand theory, the price of gold has increased dramatically.
Looking at the chart, the gold price has risen to 300% since the first ETF was released.
Does ETF increase Bitcoin prices?
The answer is yes and no.
This is because the Bitcoin ETF fund will cause sharks to try to collect Bitcoins as much as possible before being dumped by ETFs, and only 21 million BTCs in the world. Bitcoin is not immune to the supply and demand rule as gold, and the high possibility that it will be bull run, this time it may be even stronger than the 2017 because of the shark consolidation, 2017 largely due to the head Private small fomo jumped in. Simple theoretical thinking is that.
But in fact it is unlikely Bitcoin will have much of a similarity to gold, but until now it has not been determined where Bitcoin's instinct value is. Gold is a precious metal, and its preciousness has been imprinted in the human mind for thousands of years. Bitcoin still? Born in 2008, so far it is still vague about it. Representing blockchain, technology change the world? Not at all, bitcoin is old and full of errors, can be completely replaced by another coin. In gold, it holds the position of monopoly.
In addition, the legal framework around Bitcoin and cryptocurrency is still ambiguous, the Bitcoin ETF fund appears to be subject to SEC regulatory scrutiny, as the Bitcoin price will not be as good as it once was. It can take up to a few tens of percent change a day, and worse than a little bit of gold today.
How does the SEC make decisions about Bitcoin ETF?
The passage of the Bitcoin ETF will be decided in accordance with the following procedure:
- ETF sends a "proposal for change" to the SEC
- SEC publishes a notice of filing in the Federal Register and collecting comments
- The SEC has 45 days from the date of the announcement to approve or reject the ETF.
When the SEC decides not to decide within 45 days, it can be delayed up to 3 times.
- First: Add 45 days if the SEC feels it is the right time.
- Second: Add 90 more days to the ETF to resolve the grounds rejected by the SEC
- Third: 60 more days for the same reason
This means that the actual decision-making date can be extended to 45 + 45 + 90 + 60 = 245 days from the date the information was posted.
Smilestone
- Notice date: 26/06/2018.
- Initial decision date: 10/08/2018.
- Delayed phase 1: 24/09/2018.
- Delayed phase 2: 23/12/ 2018.
- Delayed phase 3: 21/02/2019.
We are currently in postponement phase 2: 21/09/2018.
Reference: https://hacked.com/sec-delays-ruling-on-five-bitcoin-etfs-vaneck-solidx-proposal-under-discussion/
BTC will moon, thanks for reading!