A Bitcoin ETF Will Be a Game Changer

If something is tricky or annoying to buy, a lot of people just aren’t going to buy.  This is why you see a lot of businesses offer free trials and no-questions-asked returns. They’re trying to decrease the resistance to buy.

The same happens with investable assets. Why do people trade stocks more than they trade options? Well for one thing, you can potentially make more trading stocks. But another reason is because it’s so much easier, in Australia at least, to trade stocks as compared to options.

Bitcoin Exchange Traded Fund?

Now, imagine if bitcoin and other cryptos became a whole lot easier to trade. With such hype and interest, you’d think the price of cryptos on the whole would rise, right?

Well, a future where you could buy a crypto exchange traded fund (ETF) might not be that far off. According to Bobby Cho, a trader at DRW Holdings LLC, a bitcoin ETF is only 12 months away.

Don Wilson, founder DRW Holdings LLC, also believes it’s only a matter of time. ‘Once a derivative is launched, a bitcoin ETF will follow. That’s the common wisdom,’ he said.

Bitcoin options have already been approved, in July by the US Commodity Futures Trading Commission.

According to Bloomberg:

Cboe Global Markets Inc. wants to create futures this year or early in 2018, pending CFTC approval.

There is currently no way to trade derivatives on bitcoin or other digital currencies in the U.S. right now, a roadblock for traders who want to hedge positions.

Creating an ETF on bitcoin has been a much harder task. The U.S. Securities and Exchange Commission rejected a bitcoin ETF proposed by Tyler and Cameron Winklevoss in March, saying the exchange that wanted to list it couldn’t enter into necessary surveillance-sharing agreements given that “significant markets for bitcoin are unregulated,” according to the agency. The exchange was owned by Bats Global Markets Inc., which has since been acquired by Cboe — meaning Cboe might one day offer both futures and an ETF on the currency.

It’s a pretty reasonable assumption’ that a bitcoin ETF is coming, said Michael Mollet, managing director of product development at the Cboe Futures Exchange.

People are looking for something fresh and new in the ETF space. Whether there’s huge demand for it, we would find out. Certainly people are going to try it.

Easy Exposure to Cryptos

Such an ETF would give retail and institutional investors an easy way to gain exposure to cryptos. And just like in the stock market, as more people pile into a crypto ETF, the more the market value of cryptos will rise as a result.

But if you don’t have the patience to wait for a bitcoin ETF, learn how to buy and sell bitcoin here.


Härje Ronngard,

Junior Analyst, Money Morning

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Fat Tail Investment Research, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.

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