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NEW YORK — (AP) — The Securities and Exchange Commission on Wednesday reluctantly approved trading in the first Bitcoin exchange-traded fund, but remains highly skeptical about the cryptocurrency, and the commission called it “Bitcoin” in its decision. We do not endorse or endorse the coin.” Exchange-traded funds (ETFs) are an easy way to invest in something or a group of things, like gold, junk bonds, or Bitcoin, without having to buy the thing itself. Cryptocurrency advocates hope the development will push this once niche, geeky corner of the internet further into the financial mainstream.
This is the latest news. Previous articles from the Associated Press are below.
The regulatory green light has been expected for months, and the price of Bitcoin has risen about 70% since October.
U.S. regulators are expected to decide soon whether to approve the first Bitcoin exchange-traded fund, pushing a once niche and geeky corner of the internet further into the financial mainstream. there is a possibility.
In perhaps a fitting twist for the unpredictable crypto industry, a fake tweet from a Securities and Exchange Commission account on Tuesday said trading in a Bitcoin ETF had been approved.
It wasn’t.
The price of Bitcoin soared, but fell after the SEC announced that approval had not been obtained and the account had been hacked.
Here are some things you need to know about Bitcoin ETFs.
Why am I so excited about Bitcoin ETFs?
Exchange-traded funds (ETFs) are an easy way to invest in something or a group of things, like gold or junk bonds, without buying the thing itself. Unlike traditional mutual funds, ETFs trade like stocks and can be bought and sold throughout the day.
Since Bitcoin’s inception, anyone who wanted to own Bitcoin had to buy it. This means you will either need to learn what a cold wallet is or open an account on a cryptocurrency trading platform like Coinbase or Binance.
Spot Bitcoin ETFs could open the door to many new investors who don’t want to take such additional steps.
Bitcoin prices have already soared in anticipation of SEC approval, with Bitcoin trading at $45,890 on Wednesday, up from about $27,000 in mid-October. Following the bankruptcy of virtual currency exchange FTX, the price had fallen to $16,000 in November 2022.
How do ETFs work?
The Bitcoin Strategy ETF (BITO) has been trading since 2021, but it holds futures related to Bitcoin rather than the cryptocurrency itself.
The new Bitcoin ETF will perform similarly to the SPDR Gold Shares ETF (GLD) and will allow anyone to invest in gold without having to find a place to store or protect their bars. It’s the same reason some people invest in the SPDR Bloomberg High Yield Bond ETF (JNK). This allows an investor to simply buy one of his 1,000 or more low-grade bonds that make up the index.
How many Bitcoin ETFS can there be?
The SEC has received applications for 11 Bitcoin ETFs. The deadline to approve applications from joint ventures, including Ark Investments, is Wednesday, but regulators could approve or reject all 11 on the same day, or take actions somewhere in between.
What are the disadvantages of ETFs?
Longtime crypto fans may disagree. Cryptocurrencies like Bitcoin were created in part as a result of distrust in the traditional financial system. In the case of ETFs, Wall Street will act as an intermediary between investors and cryptocurrencies.
ETFs also have fees, but they tend to be relatively low compared to the financial industry as a whole. These fees are expressed through something called an expense ratio. The expense ratio tells you how much of the fund’s assets the ETF uses each year to cover its costs.
When is it better to hold physical Bitcoin?
ETFs do not deposit actual cryptocurrencies into investors’ accounts. This means that investors cannot use virtual currencies. ETFs also do not offer investors the anonymity of cryptocurrencies, which is one of the big attractions for many crypto investors.
What concerns should investors have?
The biggest concern for investors in these ETFs is the notorious volatility of Bitcoin prices.
Bitcoin soared to nearly $68,000 in November 2021, despite failing to take off as an alternative to fiat or paper currency. A year later, it fell below $20,000 as investors generally shunned riskier assets and a series of corporate explosions and scandals shook confidence in Bitcoin. Cryptocurrency industry.
Despite regulators and law enforcement cracking down on crypto bad actors like FTX’s Sam Bankman Fried, the industry still has a modern-day Wild West feel. The SEC’s hack of his X account raises questions about both the ability of fraudsters to manipulate Bitcoin’s price and the SEC’s own ability to thwart fraudsters.
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