Cryptocurrencies have become an essential digital asset with the blockchain technology. Since the first cryptocurrency appears in January 2019 (Yes, that is Bitcoin), It has reached $20,000 and helped the cryptocurrency's total market capitalization gained more than $300 Billion. Besides that, Bitcoin becomes the pioneer in the blockchain community and attract the development community to create many new coin for a wide range of application.
Now, the cryptocurrency has received a lot of attention all over the world such as companies, banks, funds, government,... and in a few more months, there will be a turning point for Bitcoin, when one of the major U.S Agency - SEC(Securities and Exchange Commission) make important decision. I think all of you know what I'm talking about. Bitcoin ETF is being discussed all over the internet, news, social medias,... So actually, do you understand what is an ETF?
What is an ETF?
ETF - The Exchange Traded Fund is an investment fund traded on stock exchanges, similar to stocks. Imagine the ETF would look like a basket of assets like stock, gold, commodities. Assets in this basket will be controlled by an organization called a fund manager and traded close to its net asset value. For example: If you have some money and want to invest in stocks, you find the oil sector to be the most profitable. Instead of bringing all that money into the oil company A, you will invest that money into an ETF that contains stocks of oil companies A, B, C ... and you just follow up its operations of all oil companies through ETF funds.
How about Bitcoin ETF?
Bitcoin ETF is an investment basket that simulates the entire Bitcoin index of companies constituting. Bitcoin ETF will track the Bitcoin value and be traded on the traditional stock market. Investors in the Bitcoin ETF fund will have to guess Bitcoin's value without a Bitcoin purse to protect its assets. This is the strengths and weaknesses of the Bitcoin ETF. Real investors do not own any Bitcoin, similar to the Gold ETF (GLD). It looks like derivative stock. This mode will help non-experienced investors to easily enter the Bitcoin market. With the Bitcoin ETF, large investors can invest in multiple types of cryptocurrency at the same time or invest in Bitcoin securities and investments in a single portfolio.
