It seems sometimes that extremely tense feelings, also known as ETF, is currently the main emotional trend within our society. You know, with the financial market in bear market territory but searching for the light of day, geo- and socio-political topics heating up the atmosphere, and of course the with ever-increasing ecological doom unfolding around us, it seems inevitable that we can’t control our urge to release these bottled-up ETFs for much longer. Since exchanging these ETFs on the spot, peer-to-peer, and effortlessly across borders, is very frowned upon, even illegal sometimes, the respective governmental bodies need to take action.
Experts in the field project another handful of months before the cork will pop off the hood. When that day does come, we need to be ready and capable to manage our emotions better than today. We certainly don’t want another lunatic scenario with casualties that could have been avoided. Oversight and guidance for those who need it, freedom of choice for everyone.
… wait, wasn’t this supposed to be a Bitcoin article?
Well of course, the abbreviation ETF actually stands for “Exchange-Traded Fund” and means something completely different. Currently the Securities and Exchange Commission (SEC) keeps sandbagging the approval for a spot Bitcoin ETF, whether with good reason, as a marketing stunt, or purely out of spite is a different discussion. But, in a way, one could argue that the whole debate has stirred up some extremely tense feelings within the financial markets.
What is an ETF?
An Exchange-Traded Fund is an investment product, a fund pool composed of different types of shares traded on the stock market. ETFs are designed to track the performance of a specific index, commodity, bond, or a basket of assets. The main purpose of this instrument is to provide investors with diversified exposure to various markets and asset classes. Furthermore, they offer liquidity, transparency, and the flexibility to buy and sell throughout the trading day (when the local stock market is open). Due to these characteristics, ETFs have become a very popular choice for investors looking for a cost-effective and diversified way to invest in a wide range of assets. Despite the usual market risks, which basically apply to any investment tool in the books, diversified (but low in risk) ETFs tend to be good contenders for the “park your savings and look away” long-term investment strategy. But are we really looking for that?
Why a Bitcoin ETF is Needed
No, we are here for the thrill of market swings. No risk, no fun, let alone rewards. Pfizer will thank you later for purchasing their heart medication. That said, investing is a massive responsibility, especially within the crypto industry. We should be aware by now that financial responsibility is of incredible importance. You are the master of your own wealth; don’t let anyone tell you otherwise. However, sometimes we don’t have the time to keep up with anything other than reruns of the Kardashians while we work and take care of our adult responsibilities.
Since navigating crypto exchanges, managing hardware wallets, and more can be challenging, having a financial instrument that tracks the Bitcoin price to allow investors to trade efficiently and within the legal parameters of regulation sounds like a great deal. Of course, crypto hardliners dream of freedom from institutions, but they do serve a purpose when it comes to mass adoption. The crypto community wants more awareness, publicity, and recognition from their peers outside the financial realms. This is a way to make that happen. There are plenty of individuals out there who fear the complexity of the technology. Allowing them to dip their toes into the market will not only remove that speed bump but might also lead them directly to a more cost-efficient source; the blockchain.
Access is probably one of the major drawbacks crypto faces right now (besides scammers, of course). Considering known institutional investors such as Blackrock, Fidelity, Ark Invest, etc., that are impatiently waiting on the sidelines, it should be a no-brainer assumption that there is a lot of demand within their client list. Think of it this way: no experienced company launches a product request over and over again if they don’t believe it holds value. We’ll have to wait and see, I guess.
Adopting Traditional Finance
We can argue about who is adopting whom. It is probably traditional finance that is adopting crypto assets to become a part of their world. The counter-argument can be made.
What is important to note is that once a Bitcoin spot ETF goes live in the United States, it could lead to exceptional price rallies, caused by unimaginable funds flowing into the space. You can read about the insane amounts everywhere. However, to circle back to those extremely tense feelings and, more importantly, expectations, the initial effect might be disappointing. Just like colleagues and customers at your workplace pressuring you to complete a task as if their life depended on it, nothing of value usually happens with a snap of a finger. Just as work deadlines should be realistic (and respected), the adoption of investment tools must be as well. All those people who are already in the space might believe in the fundamentals of blockchain, they might see adoption growing, and positive signals appearing all over the planet. However, the crypto industry is comparatively small, and once major doors get opened, it can still take some time before the masses find the entrance.
Final Thoughts
This debate is, if nothing else, entertaining to watch. Approving a Bitcoin ETF seems inevitable, especially if the US economy wants to stay relevant and keep technological progress in-house. That said, whether the SEC bites the bullet now or in a handful of months might very likely not influence the market volatility all too much. It would be nice to have parallel worlds to compare which news and progress have a greater effect on the market value of Bitcoin and all the other altcoins. In the recent past, some very strong news has been published (i.e., Hong Kong crypto trading approval, the Ripple case, Greyscale ruling), but they have hardly led to significant movements to the upside. If the four-year cycle holds, we will have a major upside towards the halving in 2024 with or without a Bitcoin ETF. The question is, by how much? Rumour has it the SEC will only approve this spot ETF when the retail market is FOMOing again. Is it a marketing stunt after all? Here is a possible marketing slogan:
“Bestowing Increasing Tranquillity Can Only Inspire Navigating Extremely Tense Feelings — Bitcoin ETF”
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