[Art made by myself]
Right now the entire Crypto world is talking about one thing. The Bitcoin Spot Exchange Traded Fund (ETF)! It is currently the biggest topic and it is one of (if not the biggest) topics ever in Crypto History. Sounds probably exaggerated, right? But it is not!
The most glaring thing about this is how complicated it sounds to most people. Like what in the world is meant by the words "Spot ETF"? Almost sounds like gibberish (especially to the less experienced folks), and it almost sounds like if it was that important it wouldn't be shrouded in such complicated terms.
This complication has further led to the reduced knowledge of what is about to happen and reduced excitement in the Crypto world, but as you would learn today, this whole thing is as big as can be.
Bitcoin Spot ETF Explained
Right now if a person wants to invest in Bitcoin they have to create an account on an exchange or open a wallet, buy Bitcoin from an exchange or through peer-to-peer, and then store it on the wallet or exchange of their choice.
To do this, one has to learn about how to open a wallet, how to buy Bitcoin, and how to secure it. The person would also need to take a lot of security measures to keep their Bitcoin safe like safely hiding their passwords, private keys, and other important information. Any little mistake can be costly.
Now imagine an old person or someone who is not really into tech doing this. The entire process might be too difficult for them, learning about all these things and putting in good money when there are risks and when handling Bitcoin is something they are new to might scare them away.
But with the Bitcoin Spot ETF, all these problems are gone. With this ETF, they can simply go on the Stock Exchange and buy a share of the Bitcoin Spot ETF which is the same price as Bitcoin. And so the price of their shares goes up and down with the Bitcoin price. For example, if Bitcoin is $55,000 their shares would be $55,000, and so on.
This is them owning Bitcoin without having to buy and store Bitcoin, instead, they buy shares.
For Bitcoin to be traded in this way, though, an ETF provider, which is a licensed company needs to be authorized by the SEC to trade Bitcoin in this way. The Bitcoin would be bought, kept, and managed by this ETF provider.
Which means when a person buys Bitcoin shares, the ETF provider would actually have to buy Bitcoin, hold it, and store it for the person. The same happens when the person intends to sell.
Why A Bitcoin Spot ETF is Such a Big Deal
Crypto has only been around since 2009. Before then millions of people were already trading stocks. Stocks are more mainstream and common and there are so many trusted asset managers who invest in stocks on behalf of their clients. Trillions of dollars are being managed by these asset managers and stock traders.
Many of these stock traders and asset managers would be more at home with trading Bitcoin if Bitcoin is made to be bought easily like the stocks they are already used to. And with this Spot ETF, this has become completely taken care of! Traders with Trillions of dollars in funds would have the opportunity to buy Bitcoin the same way they buy all the things they actively trade in. It is like listing Bitcoin on an exchange, except this time it is the American Stock Exchange!
Conclusion
As mentioned above, the American SEC has not approved a Bitcoin Spot ETF yet, but hopefully, they will. All eyes are currently on it, waiting. The Bitcoin price, if this approval happens, is expected to be humungous!
The chances of the SEC approving this are quite high, though, especially as BlackRock, an American Multinational Investment Company (which according to Wikipedia "is the world's largest asset manager, with US$9.42 trillion in assets under management as of June 30, 2023") has applied to become a provider of Bitcoin Spot ETF.
Other huge names like Fidelity, Franklin Templeton, Invesco Galaxy, Wisdom Tree, VanEck, etc. Have also filed this application. The SEC is under so much pressure to approve and all these names are ready to meet all the requirements of the SEC. Eyes on the prize!
The End
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The Bitcoin Spot ETF is a big deal depending on who is accessing. Undoubtedly its approval will boost the price and this will have a network effect, mining commissions will skyrocket and custodial transactions will be seen as the solution, but beware, that is not the way. Much of the world will not have access to these financial instruments, inclusive solutions are necessary.
Bros , I have some questions to ask you about the spot ETF , what exactly do you really wants us to understand about the whole thing ?
Lmao. Read the post, motherfucker!
Ara ana Apu gi Nevies ?
Lol. Onye Ara di ka gi
One of the thing I am really afraid of is we might be having more of ETF soon in the future if not careful
Why are you afraid of that?
It can destabilise the Crypto market more and makes it more volatile.