It looks like this year could be the year for the launch of Bitcoin ETFs. Analysts from Bloomberg are saying that the chances of the launch are now a staggering 75%, after months of speculation surrounding the world’s most prominent digital currency. With the possibility of a Bitcoin ETF becoming a reality in 2021, it’s an exciting time for the world of cryptocurrencies.
1. Bloomberg: Crypto ETFs Paving Way for Bigger Market Moves
The cryptographic ETF market, also referred to as crypto-ETFs, is one of the most rapidly developing financial markets out there. They are much more than a traditional ETF as they provide investors with exposure to an asset class they wouldn’t normally have access to. Bloomberg is predicting that the recent surge of interest in crypto-ETFs is only the beginning, and that this emerging market will be providing investors with bigger opportunities in the future.
Investors now have more options to gain exposure to cryptos through ETF products, increasing the possibility of making more profitable investments. Crypto-ETFs offer high liquidity, low fees and a wide range of products, allowing for greater portfolio diversification. They also provide gains if the underlying asset rises in value, the same way as regular ETFs. Furthermore, more cryptocurrency related products like options and futures contracts are being launched to further enhance investment options.
- Market exposure to crypto assets
- High liquidity & low fees
- Wide range of products
- Portfolio diversification
- Options & Futures contracts
2. Will Bitcoin ETFs be Launched in 2019? Analysts Say Yes
As the crypto space continues to evolve, many analysts have turned their attention to the prospects for Bitcoin ETFs in 2019. While there is still no definitive answer, an increasing number of analysts believe that such an ETF may be launched before the end of the year.
The Growing Support for an ETF
- An increasing number of exchanges have started offering Bitcoin-based derivatives.
- Bitcoin exchanges are beginning to add more regulations to their operations.
- Policymakers are in the process of introducing measures for better cryptocurrency oversight.
The rising support for the possibility of a Bitcoin ETF is further bolstered by the emerging regulatory framework in the crypto space. Not only is the US Securities and Exchange Commission (SEC) seeking feedback on the issue, but bills to protect investors from scams and frauds have also been drafted in various states such as Wyoming and New York.
The Increasing Optimism
- The SEC is setting up an infrastructure for the approval of ETFs.
- Well-established players like Fidelity and TD Ameritrade are entering the space.
- Large firms like Goldman Sachs are investing in cryptocurrency projects.
Analysts and investors alike are now looking optimistically towards a possible Bitcoin ETF in 2019, as the infrastructure around cryptocurrencies continue to mature. For instance, US-based exchanges like the Nasdaq are now planning to offer crypto derivatives. Furthermore, traditional financial institutions such as Goldman Sachs, Fidelity, and TD Ameritrade are beginning to enter the space, which bodes well for the prospects of a crypto ETF.
3. What Crypto Market Regulation Can We Expect?
With the rise of cryptocurrencies and blockchain technology, the potential for future regulations is an interesting conversation to be had. The market is a wild west, with no set rules to control trade and speculation. Here are some of the regulations we can expect:
- Taxation – Governments will take a more active role in taxing blockchain and cryptocurrency trades, just as they do for more traditional investments like stocks and bonds.
- KYC/AML – Rules for verifying customer identities are likely to be more regularly enforced and implemented as trade with cryptocurrencies and blockchain becomes more frequent.
- Capping of positions – To prevent market manipulation and limit speculation, governments might set caps to the number of tokens a single trader can hold.
Although market regulations may seem daunting, many governments are taking steps to ensure that cryptocurrency trading is done in a safe and secure manner. However, it’s hard to predict the exact regulations that will be implemented due to the ever-changing nature of the blockchain industry. Regardless, it’s clear that regulations are here to stay and will play a major role in the future development of cryptocurrency markets.
4. Bitcoin ETFs: Regulatory Hurdles on the Horizon
Although an ETF for Bitcoin may seem like a surefire way to go mainstream, there are still a number of regulatory hurdles that need to be cleared before it becomes a reality. Here are some of the main challenges:
- Establishing custodial solutions for Bitcoin: Investors will want the assurance that their Bitcoin is being stored securely and exactly how it will be held and safeguarded needs to be made clear.
- Understanding the inner workings of Bitcoin: Its decentralized, peer-to-peer nature means that regulators need to gain a clear understanding of how Bitcoin works.
- Meeting Know Your Customer/Anti-Money Laundering requirements: As centralized exchanges become increasingly regulated, more stringent measures will be enforced on custodial services, including KYC/AML.
Ensuring adequate liquidity: Given that the traded volume of Bitcoin is still relatively small, ETFs would need to generate enough interest from buyers and sellers to ensure that there is enough liquidity in the market. Otherwise, tough timelines will be imposed on the ETFs to prevent price manipulation.
While these are some key challenges, it doesn’t mean that a Bitcoin ETF will never become a reality. If approved, these funds could provide a massive endorsement and financial incentive for cryptocurrency markets, which are still struggling to gain regulatory acceptance.
5. What are the Implications of a Bitcoin ETF Launch?
Social Acceptance
Firstly, the launch of a Bitcoin ETF could have a massive impact on the social acceptance of Bitcoin. The entry of institutional investors into the Bitcoin market could lend it increased legitimacy among traditional investors, paving the way for more mainstream adoption. All of a sudden, Bitcoin would no longer be seen as just a fringe asset, but as a viable traditional investment.
Price Impact
Secondly, the launch of a Bitcoin ETF would almost certainly lead to a dramatic increase in price. Once institutional investors realize that they have the ability to invest indirectly in Bitcoin via ETFs, many of them would be tempted to pour money into the market, leading to increased demand and a surge in prices. This could have a positive effect on Bitcoin investors, but it could also create a dangerous speculative bubble where prices become excessively inflated.
As the Bloomberg team has reported, the odds of the launch of Bitcoin ETFs this year looks promising. As Bitcoin’s future remains in a state of speculation and speculation drives the markets, this is a development that many crypto traders and enthusiasts alike are keeping their eyes on with close consideration. Whatever the outcome, it’s sure to be an exciting journey ahead.
