bitcoin ETF Archives

Must Read: Four Reasons Why the Bitcoin Bullrun May Be About to Start

Posted on April 23, 2018 | by [email protected]

Post Tax-Day, Bitcoin prices have been on the rise, but considering the massive slump in the first quarter of 2018, many are left wondering if this boom will last. While nobody has a crystal ball that can predict the future, many experts believe that a major rebound is just around the bend.

Thomas Lee, managing partner at the popular financial firm Fundstrat Global Advisors, predicts a record peak for Bitcoin by July. While Lee’s prediction is based on data from Bitcoin’s 22 corrections since 2010, here are some additional reasons why many believe that Bitcoin’s price will continue to rise.

Bitcoin Futures and ETFs

In December 2017, CME and CBOE launched the first Bitcoin futures contracts, enabling consumers to get exposure to Bitcoin price movements without holding any actual Bitcoin. The rollout of these futures exchanges put Bitcoin well onto the mainstream map, and there is speculation that the SEC will soon approve Bitcoin ETFs, as well. According to the SEC, “the agency has started the process to approve or disapprove a change in its rules that allows two Bitcoin ETFs to be listed on the NYSE Arca Exchange.” SEC approval for a Bitcoin ETF exchange will likely further cement Bitcoin’s mainstream presence and, in doing so, have a positive impact on the digital currency’s price.

SEC Regulation

In early March, the U.S. Securities and Exchange Commission (SEC) announced that all cryptocurrency platforms that meet the definition of a “security” must register with the SEC as a national securities exchange. The increase in regulation likely contributed to Bitcoin’s price dip immediately afterwards. However, in the long term, I believe this regulation will protect against scammy ICOs and hacks.

Furthermore, I believe that this regulation is further proof of Bitcoin’s influence at the mainstream level. When an industry scales and grows as fast as crypto, increased regulation is inevitable. We should stop looking at regulation as a barrier to the crypto space, and instead learn to work alongside it to make the industry more compliant, transparent, and reliable than before.

Increased Retailer Acceptance

Bitcoin is currently accepted at several major retailers, including Overstock.com, Expedia, Microsoft, and about another 100 stores with more growing very quickly. Amazon has also secured some cryptocurrency domains, and Starbucks CEO Howard Schultz has expressed his interest in using cryptocurrency for large-scale retail adoption.

“I personally believe that there is going to be one or a few legitimate trusted digital currencies off of the blockchain technology. And that legitimacy and trust in terms of its consumer application will have to be legitimized by a brand and a brick and mortar environment, where the consumer has trust and confidence in the company that is providing the transaction.” Schultz said. With Starbucks going increasingly digital with a wildly successful mobile app, adding cryptocurrency seems like a natural next step.

In the bigger picture, I believe that acceptance by more retailers will increase the number of transactions, wallets created, and overall Bitcoin holdings as more consumers use Bitcoin to pay for goods and services, and that all of this increased activity will continue to boost the crypto economy and lead to a rise in prices.

Lightning Network

On March 15, Lightning Labs launched a beta version of its Lightning Network (LND) software specifically available for the developer community. Designed to tackle some of the limitations surrounding the legacy bitcoin blockchain’s slow transaction times and high processing fees, LND is an “off-chain” solution that uses smart contract functionality to process transactions more quickly and cost-effectively than ever before.

Co-founder of Lightning Labs Elizabeth Stark said that the goal of the Lightning Network is to process “many thousands of transactions per second and maybe someday even millions of transactions per second,” surpassing the capabilities of traditional credit card companies like Visa.

With this kind of technical innovation in the works, I predict that Bitcoin will soon achieve greater enterprise adoption and prices will soar. But it may take a little bit of time. As with this kind of technical innovation in the works, Bitcoin prices are projected to soar. But it may take a little bit of time. As Stark said herself: “Bitcoin is a marathon, not a sprint. People wanted it to be a sprint.”

With so much momentum surrounding Bitcoin and other digital currencies, it seems that Bitcoin prices are on a trajectory to increase. To learn more about diversifying your retirement account with Bitcoin and five other cryptocurrencies, give one of our IRA specialists a call today at 877-936-7175.

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Bitcoin ETF: Why Owning Bitcoin is a Better Investment

Posted on September 28, 2017 | by [email protected]

Exploring the Pros And Cons of Investing in a Cryptocurrency ETF

Since the emergence of the first ETF in 1993, when the American Stock Exchange launched Standard & Poor’s 500 Depository Receipts (SPDRs), the ETF market has grown into a $3 trillion industry that is experiencing investment inflows from institutional and retail investors alike.

What is an ETF?

ETFs (exchange-traded funds) provide investors with a convenient low-cost way to purchase an index that tracks underlying assets such as stocks, bonds or commodities without having to go and individually buy each underlying asset. Instead, investors can simply buy shares in the specific index-tracking ETF that they would like to hold in their investment portfolio.

Furthermore, ETFs allow investors to own assets that are otherwise difficult to buy and store, such as gold or silver, for example, which is another reason why this asset class has grown in such popularity over the last 24 years.

Currently, there are thousands of ETFs ranging from straightforward stock index-tracking funds to very esoteric ETFs such as the AlphaClone Alternative Alpha ETF, which mimics hedge fund trading strategies for U.S. equities or the ProShares Ultra Nasdaq Biotechnology, which gives investors 2x leveraged exposure to the Nasdaq Biotechnology Index.

Interestingly, there is a new asset class that may soon also be available for purchase through an ETF. That asset class is digital currencies.

Bitcoin and Ethereum ETFs

Due to the increasing demand for digital currencies such as bitcoin and ethereum as investments, several investment companies have filed digital currency ETFs with the U.S. Securities and Exchange Commission (SEC) in the hope to package this new digital asset class into a well-known and regulated investment vehicle.

A bitcoin ETF, for example, would allow large institutional investors to easily gain exposure to this promising new asset class in a fully regulated format. Additionally, it would also provide retail investors with the opportunity of investing in bitcoin without having to personally buy and securely store the digital currency themselves.

Having the option to buy and sell an ETF whose value tracks the price of bitcoin or ethereum as easily as you would buy or sell a stock would be welcomed by investors who would like to diversify their portfolios to include these hot new digital assets.

Pros and Cons of Digital Currency ETFs

When it comes to digital currency ETFs, there are pros as well as cons that need to be taken account from an investor’s point of view.

Pros Are Centered Around Ease of Use

The main selling point of a bitcoin or an ethereum ETF would be that these investment vehicles could be easily bought and sold on regulated stock exchanges, which would mean:

Any investor could easily gain exposure to digital currencies as an asset class.
No need to learn or worry about the technicalities of purchasing digital currencies
Investors would be able to deal with regulated financial institutions when buying and selling these ETFs, instead of dealing on unregulated online digital currency exchanges.
ETF are more liquid would be easier for buying/selling than digital currency exchanges.
Investors would not be faced with the tricky aspect of secure storage of their digital currency holdings. Digital currencies are kept in digital wallets and can be prone to cyber theft. Digital currency ETF investors would not have to worry about this are their coins would be stored by the fund’s custodian.

As appealing as a digital currency ETF may sound, there are also several downsides to owning a bitcoin or ethereum ETF versus holding the actual digital currency itself.

Cons and Why Owning the Asset is a Better Investment

First, digital currencies are known to be a good hedge against financial markets turmoil. The price of bitcoin, for example, has spiked in the wake of the Greek debt crisis, during Cyprus’ bank bail-ins and after the announcement of the ‘Brexit’ referendum results.

Holding bitcoin indirectly through an ETF could negate the hedge ability of the investment

The price of the ETF could easily be negatively affected when investors sell off risky assets. While the price of shares in an ETF is meant to track the underlying asset(s), their value is also driven by supply and demand for the ETF’s shares. Hence, a bitcoin ETF would likely not act as a hedge as well as the digital currency itself would.

Second, ETF investors need to trust the custodian of the ETF.

While a custodian bank’s own funds and those of clients should be legally separated, it could occur that investors lose the capital they have invested in an ETF held at a custodian that is forced to declare bankruptcy.

This risk is considered to be rather low, the global financial crisis in 2008 has shown the world that it is possible even for large banks to fail.

Third, most proposed digital currency ETFs do not insure their bitcoin holding against theft or loss.

If your investment is lost to hackers, ETF managers will not reimburse the funds.

While you would expect bitcoin ETF managers to know how to securely store large digital currency holdings, it is also possible for professionals to fall victim to theft when it comes to their bitcoins.

Summary

Despite the benefits that a digital currency ETF can bring to the market, as an investor you will most likely be better off investing directly in the digital currency of your choice. Whether you are looking at investing in bitcoin, ethereum or ripple, you will probably be better off allocating a part of your retirement fund in digital currencies directly, instead of investing in an investment vehicle that only provides you with indirect exposure and carries several other risks along with it.

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Forget Winklevoss ETF, here are alternative Exchange Traded Bitcoin backed Instruments to invest

Posted on March 14, 2017 | by [email protected]

Second Week of March witnessed heavy drama in terms of Bitcoin price and swaying fundamentals thanks to Winklevoss ETF that was pending approval. The SEC set the date of verdict on 10^th March, before which the Bitcoin prices rallied anticipating the ETF approval. Nevertheless, Securities and Exchanges Commission decided to reject the proposal owing to the risks the Bitcoin markets possess in terms of hacks, security and the irregularities in monitoring. Nevertheless Winklevoss brothers are persistent over the ETF as few Bitcoin based instruments that are being actively traded over various markets have set the precedent. Let’s delve deep into what these instruments are and how they are faring:

Bitcoin ETI:

Europe has been the forerunner in the standardization of the cryptocurrency assets and providing them a platform that is comparable to mainstream assets. A bitcoin backed Exchange Traded Note (ETN) was approved in 2015 in Sweden followed by the approval of a Bitcoin Exchange Traded Instrument (ETI) which was approved in Gilbraltar. The ETI enables indiviudals to invest in institutional instrument that is representative of digital currency. The ETI trades under the ticker ‘BTCETI’ and is approved by Gilbraltar Stock Exchange. The instrument was also approved by Germany’s Deutsche Borse and has found its place in special investment vehicles (SIV).

XBT Provider:

XBT provider is a publicly traded Bitcoin fund exclusively for Europe. It is designed to track the movements of its underlying asset which is Bitcoin in this case. The fund offers Tracker one(ticker: COINXBT) and Tracker EUR (ticker:COINXBE) in the form of an Exchange Traded Note (ETN). The fund investors have enjoyed good and consistent profits over the period of XBT Provider’s growth.

Bitcoin Investment Trust:

‘Bitcoin Investment Trust’ was launched in 2013 by Barry Silbert, is an open ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables accredited investors, with annual incomes greater than $200,000 or assets of more than $1 million, to gain exposure to the price movement of bitcoin for a minimum investment of $25,000 without the challenges of buying and securely storing bitcoin. The price of GBTC shares roughly account for 10% of Bitcoin price and hence people wouldn’t be directly exposed to the risk of Bitcoin. It also gives you additional tax benefits apart from the reduced exposure.

What is happening with the Winklevoss’s Bitcoin ETF?

Posted on October 28, 2016 | by [email protected]

Winklevoss brothers are successful American rowers and Internet entrepreneurs. After their networking site ConnectU, they went to become venture capitalists for digital currencies. They raised the seed funding for bitcoin payment processor ‘BitInstant’ and claim to own 1% of Bitcoin in existence. Right from the onset, the brothers have always regarded Bitcoin as an equivalent to Gold. They have made conscious attempts to level Bitcoin Trading grounds by launching features that are prevalent in general asset trading. One such attempt recently is the launch of an ETF that has been doing rounds. Let’s look into the details of how this journey progressed and how is the ETF being handled.

Launch of Gemini Exchange:

The twins launched Gemini Exchange with safety and legality as flagship selling points. It was the world’s first fully regulated exchange based out of New York operating throughout North America, Asia and Europe. The exchange was few of the first to receive BitLicencse from city of New York making it completely legal. It later expanded the operations to Asia and Europe making it a successful venture across the globe.

Launch of Daily Auctions:

In an attempt to level the playing ground for Bitcoin and get it closer to adoption, they have planned to launch Bitcoin Auctions. Beginning at 5pm ET every day, Gemini will begin accepting two-sided bids in BTC/USD for the next day’s auction. After 22 hours and 50 minutes of bidding, Gemini will begin publishing “indicative auction prices” every minute. This gives the bidders a chance to pull out their bids until 3:59pm ET, after which the final bid closes. The closing price is the price at which the greatest aggregate buy and sell demand meets.

This methodology is generally present in currency and commodities market to determine closing and bidding prices. This is a conscious effort to bring Bitcoin to mainstream adoption.

Launch of the ETF:

The Brothers had moved for the request to launch an ETF and list it on Nasdaq in 2013. After number of trials, the US Securities and Exchange Commission (SEC) has put the request for review. SEC is seeking additional public feedback as it weighs whether to approve the bid to launch the bitcoin ETF. The brothers have later moved to make amends their proposed ETF. They are now backing ‘State Street’ as administrator, according to a filing with the Securities and Exchange Commission. Gemini’s daily auction price at 4 p.m. EDT will be the price the NAV of the ETF. While investors are backing the ETF, how SEC would approve this game changing move is yet to be seen.

South Korea planning to launch its own digital currency over blockchain?

Posted on October 26, 2016 | by [email protected]

South Korea is one of the fore runners when it comes to technology and its applications. The country enjoys a rich technological heritage with well-regulated and generous venture capital backing. Owing to this favorable set-up, South Korea has become the home for diverse tech startups that have gone on to become market giants across the globe. Even in the case of cryptocurrencies and Blockchain, all these observations are consistent. After achieving superior levels of expertise in digital assets and blockchain, the authorities are now planning to launch a national digital currency. While this move certainly is gutsy, let’s look into whether South Korea is actually prepared enough to handle it:

History of Cryptocurrencies:

When it came to cryptocurrencies, South Korea has always kept an open mind and has been liberal about the proceedings. Right from 2010, there has been liberal regulation of Bitcoin and startups based on the cryptocurrency evolved effortlessly. The transition from traditional finance to evolved Fintech happened with little friction. Even Public fund managers were able to incorporate Bitcoin indicating the kind of regard Bitcoin has been enjoying.

Out of one such instance, came the first ever Exchange traded fund (ETF) of Bitcoin across the world. While in USA, Winklevoss brothers are finding it difficult to get their ETF approved, Korea was able to launch it. The Korea Exchange, official exchange of South Korea would be hosting this ETF along with other products it offers.

Merchant Adoption:

The merchant adoption in the country is rising and is evident in the way the exchanges have launched adoption schemes. Since 2014, Coinplug has been building Bitcoin infrastructure in Korea with over 7,000 ATM machines. They have introduced okBitcard, which allows buying Bitcoins instantly over the counter. This facility is available at over 24,000 convenience stores.

Apart from Coinplug, Korbit has a very strong presence in Korea with over 10,000 ATM machines and 50 banking institutions. These banking institutions can receive remittances from bitcoin senders. The service provided by Korbit for these payments, ‘BitWire’, received good response.

Setting up the currency:

At 12th annual FinTech Demo Day in Seoul, the chairman of South Korea’s Financial Services Commission (FSC), Yim Jong-yong, announced his department’s plans to lay groundwork for spread of digital currency. The FSC did not reveal any details as to what form or technology the digital currency will use. The government and the local financial industry players will launch pilot projects this year with Blockchain. The work would involve setting up new National cryptocurrency on the framework of Blockchain.

The department is offering three trillion won ($2.65 Billion) in funding over the next three years, to financially support the development of the fintech sector in South Korea.

Blockchain Support Bill takes wings in US Congress

Posted on September 14, 2016 | by [email protected]

The US Congress has passed a pioneering resolution in the favor of the crytpocurrencies and blockchain on 12th September. While this would have a positive implication on prices, let’s look into the details of the Bill:

Resolution passed by firm backing:

The US House of Representatives has passed a resolution that will support the growth of digital currencies and blockchain technology. The non-binding resolution calls for a national technology innovation policy that includes supportive language for digital currencies and blockchain technology.

This resolution was first introduced in July, prompting the US government to craft a national policy for technology. It has specific mentions for digital currencies and blockchain. The bill, written by Illinois Representative Adam Kinzinger, passed by a voice vote from backers late noon on September 12th. The measure is perhaps the most significant to emerge from Congress to date on digital currencies and blockchain tech. The resolution emerged months after the House Committee on Energy and Commerce discussed and proposed the technology. The comments from supporters on the debate floor indicated that there was genuine interest in the issue among House members.

Michael Burgess, a Republican from Texas, said at the hearing:

“There’s no doubt that blockchain innovations are on the cutting edge today.”

What remains is to see whether the next session of Congress, will continue to focus specifically on bitcoin and blockchain.

SEC Delays Decision on SolidX Bitcoin ETF:

The Winklevoss twins are in the same loop with SEC for their ETF

The deputy secretary of the SEC, Robert W Errett, has pushed back the date to approve SolidX’s request to list a bitcoin ETF on the New York Stock Exchange. Typically, the SEC has 45 days from the time an application is filed in the federal register to approve the measure. The situation closely resembles Winklevoss brother’s Bitcoin Trust on Bats Exchange. The financial regulator has the power to extend the time till 240 days. In line with this, SEC deputy secretary Robert W Errett pushed back the deadline to approve the SolidX bitcoin ETF. The date was shifted from 16th September in the federal register, tentatively for a period of additional 45 days.

Circle Brings Blockchain Payments to iMessage With iOS 10 Update:

Blockchain payments firm Circle has integrated with Apple’s iMessage. This move allows users to send payments in dollars, euro, pound sterling and bitcoin through the popular texting platform. Circle executives said the launch marks the end of preparations that began in June. That was when Apple announced it would open up iMessage to third-party developers.

Android compatibility

The announcement also hinted the benefits of technology standards, in this case, the short message service (SMS). As a result of iMessage’s use of Blockchain, Android users will be able to receive payment requests via the integration.