An ETF or exchange traded fund, like the name implies is a fund that you can trade on an equities exchange.A fund can invest in just about anything.The point of an ETF is to enable people to get exposure to an asset in a convenient way.Most popular funds are baskets of stocks or bonds, but there are others.Notably GLD, which holds gold.A bitcoin etf is valuable as it gives investors an easy way to own bitcoin.A lot of great answers already provided to this question.I will simply add my personal points of commentary and perspective (as a non finance person interested in this space).Fundamentally, there are 2 key contrasting notions that this question implies, that, when performing a quick really check, don’t really hold true:Bitcoin is a sophisticated financial instrumentPeople interested in transacting with Bitcoin (or any other cryptocurrency) are capable of conducting sophisticated financial transactions (as entities)The reality is that a large portion of the core Bitcoin believers (those who don’t just use it but believe in the fundamental philosophy it represents) are anti-establishment purists, who believe Bitcoin is the solution to everything that the globally established financial system has failed continues to fail to do.

Though there have been many useful technical improvements to the Bitcoin system, Bitcoin is not a sophisticated financial instrument (not like a lot of other trading instruments / technologies available in the financial market).Don’t get me wrong, the technology is sophisticated, and very technically complex (which is the beauty, but also the difficulty of using it), but this isn’t a discussion of technical sophistication, but financial - there are many other dimensions to the financial markets than technology (which many purists happily disregard and wish would go away).Reality check - no sophisticated professional financial trader treats Bitcoin (or any of the cryptocurrencies) as anything more than simply a market tradable virtual asset.This derives directly from my last point - No sophisticated professional financial trader treats Bitcoin as anything more than simply a tradable virtual asset.This means no one is interested in building tools or services on top of Bitcoin to enable you and me, as ordinary users, to do anything other than trade them as assets.This means all the financial market regulatory, compliance, legal and other issues are still relevant to your activities as an individual.

Basically, it’s the same issues if you replace Bitcoin with Gold:ie What is the point of a Gold ETF if Gold is the only asset in the ETF?Bitcoin is a pretty technical and complex subject for many people.Most people don’t understand the risks that are associated with bitcoin nor do they know how to send/receive it but they do want to take part in the upside gains of dealing with bitcoin.The ETF is going to be a way for “normal people” to take part in the massive price speculation and upside gains associated with bitcoin without having to know or understand anything about bitcoin itself.In short, people will be able to tell their financial planners that they want to invest in bitcoin and their planners can invest in the bitcoin ETF.Make sense?bitcoin diario el comercioThere are lots of growing pains involved in getting virtual currencies off the ground and into the mainstream economy.dell bitcoin mining

Bitcoin, is no exception.People are cautious with their money, and most don’t want to be the first to take the risk of potentially losing their investment if the currency tanks.However, virtual currency is gaining in popularity due to some major advantages it offers over centralized currency, and is poised to take off within the next few years.Recent significant developments signal the acceptance of bitcoin as a legitimate currency for investment, a big step toward widespread use.Currently, it’s not easy to invest in bitcoins, but many people are interested in a decentralized currency, and are eager to get in on the potential of bitcoins.Bitcoin also has the advantage of being a resource that can’t simply be printed to create more — it’s based on math and is unlike any other investment asset.backing up bitcoin-qtTen years after its inception, bitcoin has become a popular global currency, and a few groups are even trying to bring it into the traditional investment marketplace as an exchange traded fund.bitcoin dice gambling

There’s been a lot of debate over whether this step should even be allowed.The ETF ruling: A turning pointThe U.S.Securities and Exchange Commission is set to rule on Tyler and Cameron Winklevoss’ bitcoin ETF on March 11, after several years of revisions and amendments.Bitcoin has been hitting record highs, selling for $1,263 in late February, overtaking the price of gold and adding 28 percent in value in 2017.If the Winkelvoss ETF is approved, it’s estimated that the fund could result in $300 million in assets in just a week.There are some concerns about the ETF, however, including the volatility of bitcoin as a currency.bitcoin offline vaultSince it’s not tied to any government or bank, it is subject to enormous fluctuations.Because of this, there are major concerns that the fund won’t do a good job of tracking the actual value of the shares over time.Also, it could be potentially illegal, according to Bob Rice, a contributing editor to Bloomberg.bitcoin armory go online

The prospectus provided by the brothers warns that in the future, it may become illegal to own these shares, since it’s unclear how regulations will evolve as time goes on.So how will the March 11 decision affect the future of bitcoin investment?If accepted, it will pave the way for other funds and make trading bitcoins easier.If rejected, it gives competitors more information about how to succeed in the next appeal to the SEC.So where is bitcoin headed?The ruling and subsequent investment efforts of these virtual currency pioneers will be the determining factors in the success or failure of the currency.To learn more about the potential of bitcoin, take a look at the accompanying infographic by the New Jersey Institute of Technology.bitcoin cialisPreventing Another Bitcoin BubbleContrary to popular belief, I’m not always cheering for upward price movements in Bitcoin!ganar bitcoins gratis y rapido

I’ve also called down and sideways on many occasions, including regularly calling false starts etc, on my Twitter feed (as TwoBitIdiot can attest to!).When I first began thinking about this post, I initially wanted to focus on why I believed that the Bitcoin Exchange Traded Funds (ETFs) currently under review by the Securities and Exchange Commission (SEC) would present a dangerous situation for Bitcoin (but I’ll get to this later in this post).I quickly realized there was bigger issue at play here — the upcoming potential for another Bitcoin bubble!An uninformed writer at Gizmodo published an article on Friday about Bitcoin’s recent climb to an All Time High (ATH), whilst pondering why it hasn’t already died.paid bitcoin faucet networkHis simplistic views are actually shared by a large number of people who are still bewildered that Bitcoin didn’t “die” in 2013 when the market crashed from previous ATH’s of around $1,200 to a low of $180.

Reminds me of the days of post 2000 where just about everyone was proclaiming that the Internet had died — anyone else remember those days?I’m not going to rehash the history of Bitcoin booms and busts, because it is pretty well summarized in this article.If you’re not familiar with the history of Bitcoin, it’s worth reading up on it before continuing with the rest of this post, in order to get some context.Bitcoin has spent the better part of 3 years recovering from a pretty damaging boom/bust cycle — largely fueled by media, MtGox (and other market crashes) along with a number of negative “situations”, including Craig Wright, Mike Hearn & the Block Size Debate.When I wrote my post entitled Finding Equilibrium back in 2014, it was a somber look at the various factors that would contribute to the downward and sideways movement from $450 in the Bitcoin price which lasted nearly 18 months, and when I wrote Bitcoin 2016 after it rose back to $450, I touched on what would then drive the price back up within the next 12 months — now sitting at around $1,200.Today, I need to provide a warning about the risks of the price appreciating too quickly.

Yes, Bitcoin is both scarce & valuable, which will lead to the price continuing to increase over time, but if that happens too quickly, we will enter another boom/bust cycle — which is really not an ideal situation if we want Bitcoin to move from a commodity to a store of value.This means that Bitcoin does need to become boring again and how it has to move from a digital commodity to becoming a store of value (which by definition means low volatility), and eventually it could become a digital currency.Every time we hit a boom/bust cycle, we will set ourselves back many years.We’re at the point in the current cycle where if (and when!)Bitcoin breaks around $1,300 — it’s probably going to run pretty hard and fast up to new highs.My expectation is that until March 11th (COIN ETF approval day), that Bitcoin will not break through the $1,300 barrier.It may run up ahead of that, but I don’t expect it will unless there someone with inside information on the ETF approval starts to buy it up ahead of the SEC decision being made public.I’m hoping this post serves as a warning to those who are welcoming another spike in Bitcoin.

$1300 is a significant psychological price point.This is the point that arguably no one who had previously bought coins during the last “bubble” is under water.Sure, some people may have taken some losses and sold the coins, but as a whole everyone who didn’t believe in Bitcoin now starts to believe again.Therein lies the danger.My view (which reflects a 10–15% chance of success of the ETF being approved) is that the current price factors in about $100-150 worth of net present expectation that the ETF will succeed.If March 11th comes and the ETF is declined, I doubt we will see any more than a $150 decline in the price.If that happens, this will be a strong buying opportunity, for sure.However, if it is approved, it could trigger a massive bull run similar to previous runs, especially since it would probably mean that the second ETF decision due on March 31 would also likely be approved.The reason the Bitcoin price is not at $2,000+ right now, is that the likelihood of it actually being approved is quite low (15% chance of a $1,000 price increase would equate to a $150 net present price premium).If it’s approved, you can expect the price to hit $2,000 within days/weeks, with a reasonably low likelihood of a major crash below $1,300.

This will also trigger a whole new bout of volatility.This implies the current price of Bitcoin does reflect the market risk.If the ETF is approved.It’s a +1000/-150 outcome assuming the risk is around 15%.I’m not overly concerned with a Bitcoin price of $2,150 as a result of external factors like an ETF approval, which positively impact the supply/demand curve — but if it goes well past this, into the $3,000+ territory due to mania/short squeezes/media hype/FOMO and other triggers, then alarm bells will go off for me and we start approaching bubble territory where the Smart Money starts to leave.There are many personality archetypes in Bitcoin world, but here a few examples:Mooners (Bitcoin is going to the moon!Shout it from the rooftops!)Pump and Dumpers (BUY BUY BUY/SELL SELL SELL)Hodlers (aka Hoarders/BuyHoldForget)Speculators/Day Traders (buys and sells frequently — trader types)Smart money (takes a long term holder view, however, will buy and sell if facts change)All the archetypes above would love to see the price just keep going up and up with total disregard for how it impacts the Bitcoin economy, network or even the public perception and adoption of Bitcoin.

Speculators & Pump and Dumpers love volatility in particular.Mooners & Hodlers don’t really care — they just want to see new ground being broken on the long term uptrend every day.So, the real problem is Smart Money.Smart money has slowly but surely been seeping into the system.There is a lot of smart money that has come into Bitcoin in the past year at sub-$1,000 prices.Expectations are very high that Bitcoin will break $2,000 this year and my expectations are that we will hit $3,000 — but preferably much later in the year.If this barrier is broken too soon — the smart money is going to leave — quickly, and they will take their chips off the table and look for a better time to buy back in.This will trigger the bust part of the cycle.Supply and demand will eventually find equilibrium, but the ETF itself presents other challenges for Bitcoin after Smart Money leaves the system.Smart Money maintains stability in the Bitcoin price.These are typical High Net Worth Individuals conducting OTC trades but keeping the coins off the market, which chokes supply and ensures that new money and new coins find an equilibrium price point with minimal volatility.Here are the key reasons (my explanations are brief due to the length of this post) as to why I believe that approvals for the upcoming ETFs is not in the best interest of Bitcoin right now (as it would potentially catalyze in another boom/bust cycle) and if they were approved, I believe the SEC would be remiss in their responsibilities to protect the public.The block size debate has not been resolved.

We cannot have a situation where unsophisticated investors are investing in a digital commodity that could literally change overnight and disrupt the market value significantly — I’ll happily debate this in a separate post but a hard fork right now would be horrible for Bitcoin, IMHO.The new amendments have not been open to public debate and I don’t believe they accurately represent the range of outcomes that would occur.Investors buying into the ETF on a particular day are subject to market fluctuations and gyrations — depending on who has access to the supply/demand data, and where the coins are being sourced from — this could lead to potential price & market manipulation.On the point of market manipulation — it’s very easy to manufacture market rumors and trick retail investors into buying up Bitcoins through the ETF, which would be easily accessible to them.Think Wolf of Wall Street or Boiler Room.Retail & unsophisticated investors have no place buying Bitcoins right now!

It’s just too complicated and still too volatile.Losing 15–20% in a day is the norm for us living in the crypto world — but not for people who have their retirement savings on the line.The fact that it’s hard to buy Bitcoin right now is a good thing, for now, because it self selects sophisticated investments, by and large (scams like MMM notwithstanding).I don’t believe the market cap of Bitcoin has grown organically enough to be large enough to support $300m+ worth of immediate demand from potentially fickle retail or corporate investors with stop loss triggers.Bitcoin works when the price rises slowly, people hold and are reluctant to sell.$300m in overnight demand will create a spike, potentially encourage more buying (and some selling!)and the price will keep rising, until it doesn’t.Then one day, the ETF will need to offload half it’s holding because people get scared — imagine what that will do the price overnight.Bitcoin will be most successful when it’s held in small amounts by large numbers of people, not when they are highly centralized in one or two ETF’s that have to force sell it whenever people get the jitters or have to make margin calls.

You think you’ve seen volatility — baby, you ain’t seen nothin’ yet!Many comparisons have been drawn to how gold and silver ETF’s have had great success in opening up the market.Let’s not forget that they have also had great failures too and still a number of concerns around them.Given that Bitcoin has a tiny market cap in relation to gold, it’s even more prone to market manipulation and the losses could be even worse.These are not risks that Bitcoin needs right now.Critics of this post would argue that the ETF’s open up the market to a broader set of new people engaged in the Bitcoin community.ETF investments are a vanity metric.Who cares if thousands of uninformed people are buying Bitcoin and are willing to sell if the price drops 15–20%?This is also not really driving adoption, let’s be honest.It would be better for them to open an account at Coinbase and spend some time learning about Bitcoin.I’m actually way more in favor of Bitcoin mining companies and hardware manufacturers listing their shares on exchanges.

Civic is building decentralized digital identities on the blockchain — when we are in a position to list our company (years from now!), we will absolutely do that but I believe that the more publicly traded companies in the Bitcoin/Blockchain space the better.Investors can get exposure to the Bitcoin ecosystem without having to worry about the underlying asset class and gyrations in the price of the asset.The irony of the whole ETF saga is simply that Bitcoin was designed and built to be a decentralized store of value and currency, yet ETF’s are relics of the old world and here we have everyone rushing in to create centralized pools of Bitcoins.We’ve also just moved past the fake volumes from China and the loss of leverage to move the markets — but by creating a central store of tens or even hundreds of thousands of coins, this risk effectively re-enters the market.Some traders will now also be able to lever up and short sell the ETF.The role of the SEC is really to protect the public.

I don’t think that allowing an ETF as Bitcoin reaches the previous All Time High is a good idea, especially given the risks that Bitcoin still faces.If the SEC wants to allow it this year, then we’re going to be in for one heck of a rollercoaster ride!There is a already a lot of research that shows that Gold ETF’s increased its volatility — something Bitcoin already has enough of…I think I’ve made my point.Volatility is bad, stability is good.Rather have slow & sustainable growth with a view to decentralized holding of Bitcoins than to have rapid and unsustainable growth with a centralized pool of coins.If you don’t buy into this argument then you’re not thinking in the best interest for Bitcoin for the long term.If you’re just out to make a quick buck, then the ETF is a great idea!Overall, I’m not against the idea of the ETF — I think it will be a good thing but I don’t believe that 2017 is the year for it.Once Bitcoin gets into the $3–5k range (hopefully in the next year or so) and the volatility continues to drop, then I believe we can expose it to retail investors — but for now, I’m hoping we can avert another Bitcoin Bubble!Share