By
Bhushan Akolkar
April 25th, 2024
ARK Invest, lined with Cathie Wood, a seasoned Bitcoin buyer or bull, has made an application to create Bitcoin ETF in short.
ARK Invest, lined with Cathie Wood, a seasoned Bitcoin buyer or bull, has made an application to create Bitcoin’s Exchange Traded Fund a.k.a ETF in short. Using exchanges like Coinbase and the Grayscale BTC Trust, Cathie Wood has bought Bitcoin proxies in the past, but now the ingenious investor thinks and actually intends to own the digital coin. As per the SEC filings the ETF is meant to track how Bitcoin performs.
Bitcoin’s Recent Performance
Bitcoin has been trading around the $34,000 level for a number of weeks after it had dropped and traded at below $30 K for two weeks. The coin is still struggling to reach May’s high. Pundits and market watchers became watchful when it dropped to $30,000 and wanted to find out if the $30,000 level will be a support level. Unfortunately, the coin went through the hoped for support and was even expected to drop to $25,000 at some point. Even though it rebounded, a different school of thought thinks that the coin’s price may drop to as low as $20,000 prior to rebounding.
Past Bitcoin ETFs
Last week, as it has become a norm, the Securities Exchange Commission did not approve the first ETF linked to Bitcoin. Again, the landmark decision was postponed. The postponements are thought to be influenced by Gary Gensler, the authority’s (SEC) chairman, whose stance is not very clear.
The SEC chairman however is advocating for investor protection coupled with a higher degree of regulation of all crypto exchanges. The strict measures are meant to reduce fraudulent cases that have become commonplace around the world. To date, eight other people have filed for Bitcoin ETFs with the Securities and Exchanges Commission. The largest exchange by market capitalization, Coinbase, is one of the highest ranking flagship funds associated with Cathie Wood.
What Is Bitcoin ETF?
In layman terms, an ETF is basically a security that’s capable of tracking a commodity or asset. The ETF can be traded on stock exchanges, just like your regular stocks. It’s structure has the capacity to track the price of a single commodity to large and a wide range of securities. ETFs are also known to track investment strategies.
A popular example of an ETF is SPDR 500 ETF. The ETF primarily tracks S&P 500-Index. ETFs are broad and may even include mixed investments. However, they mainly include stock, bonds or commodities. A point to note is that ETFs are liquid securities with high marketability capacity. This simply means that they have an associated price which makes them easy to offload or acquire. Additionally, ETFs have very few broker commissions compared to buying individual stocks, plus the expense ratio is quite low.