On July 26, 2018, SEC (Securities and Exchange Commission) rejected the attempt of the Winklevoss twins to list Bitcoin ETF with concerns about fraud and market manipulation. On August 7, 2018, SEC delayed VanEck-SolidX Bitcoin ETF decision. A chain of events like this shakes the confidence of the crypto community and pushes the market into wide fluctuation.
Then what exactly is a ETF?
ETF, standing for Exchange Trades Fund, is a fund that tracks specific indexes. So Bitcoin ETF is a fund that tracks the Bitcoin price index.
Bitcoin ETF provides investors an opportunity to buy the ETF without directly owing Bitcoin. Instead, what investors possess are financial derivatives that are tradable and associated with Bitcoin price. Nevertheless, Bitcoin and Bitcoin ETF have no difference in profits.
Why does the rejection of Bitcoin ETF have so significant impact on the market?
As a new approach to investing in Bitcoin, Bitcoin ETF’s significance lies on:
Due to legal issues, a large number of formal institutions can’t purchase cryptocurrencies. Whereas once SEC approves the Bitcoin ETF application, these institutions can legally enter the market. Therefore, incremental capitals flow into the crypto market. That’s definitely far-reaching.
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