ETF is an exchange-traded fund, an investment vehicle that tracks the price of an underlying asset. They have broad exposure to various industries and asset classes. For example, gold ETFs have been around for years and track the price of gold. A Bitcoin ETF is a regulated financial product consisting of Bitcoin or assets related to it.
As a result, Bitcoin and other cryptocurrency ETFs trade on traditional markets, such as Nasdaq or the New York Stock Exchange (NYSE), rather than on digital currency trading platforms. The role of an ETF is like a person who only cares about the rise and fall of Bitcoin prices and settles it through cash. For example, if Zhang San buys Li Si’s Bitcoin ETF, then Zhang San will buy $1,000 of Bitcoin spot. John Doe must use this $1,000 to purchase a Bitcoin reserve equivalent to $1,000. Retail traders or investors can then sell the $1,000 of Bitcoin, effectively selling the spot they just purchased.
Retail investors settle in cash. Retail investors do not use money to buy Bitcoin, but ETF funds need to use retail investors’ money to buy Bitcoin and store it.
What is the function of this ETF? That is, many people in traditional institutions or in the traditional financial field now believe that it is unreliable to buy Bitcoins on exchanges; secondly, there are so many wallets on the chain, and registration comes and goes. Investors in the traditional financial field find it troublesome and are afraid of losing their secret keys and being unsafe. Therefore, when they buy ETFs with cash, they entrust the fund company of the ETF to help them. Go buy Bitcoin. Buying Bitcoin through ETF foundation greatly lowers the threshold for Bitcoin participation!
Through the approval of this ETF, Bitcoin will attract more traditional financial funds and attract more investors to participate.
At the same time, Bitcoin, which was previously demonized, has now become an important player in the traditional financial market. It is no longer regarded as a Ponzi scheme, a drumbeat or a digital bubble, but a real financial asset.
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