A paradigm shift appears on the horizon of the cryptocurrency market. A series of spot Bitcoin Exchange Traded Fund (ETF) applications have reached the United States Securities and Exchange Commission (SEC). Each hopes to offer investors a new channel into the digital gold rush.
Before diving into the current Bitcoin ETF applications and deadlines, it is essential to grasp the concept of an ETF and its potential implications for the cryptocurrency industry.
What Is a Bitcoin ETF and How Does it Work?
An ETF, or Exchange Traded Fund, is a hybrid between individual stocks and mutual funds. It offers a basket of assets – like stocks, bonds, or commodities – tradable on major stock exchanges.
Unlike mutual funds priced once at the end of the trading day, ETFs mirror the real-time price fluctuations of their underlying assets. Therefore, investors can buy and sell them as they would with regular stocks.
On the other hand, a Bitcoin ETF is a natural evolution of this idea, catering to the crypto industry. In essence, it is an ETF that tracks the value of Bitcoin.
Instead of direct ownership of BTC, where investors need to engage in sometimes complex storage and security measures, a Bitcoin ETF allows for an investment in BTC in a format familiar to traditional investors. This means that while investors might hold a stake in Bitcoin’s value movements via the ETF, they would not necessarily hold BTC itself.
Read more: Top 11 Public Companies Investing in Bitcoin
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Author: Bary Rahma
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