Original title: what is Bitcoin ETF and why are so many people looking forward to it? Source: vernacular block chain

Tomorrow, SEC will decide whether to approve the applications of Valkyrie Bitcoin ETF and VanEck Bitcoin ETF. If approved, it will become the first Bitcoin ETF approved by SEC in the United States.

Actually,"in 2019, at least eight major events in the encrypted world still have a chance to sweep away the haze caused by 2018."In this article, we talk about that the adoption of bitcoin ETF by SEC in the United States is one of the most anticipated things in 2019, but it hasn't been passed yet. Why?

01 What is Bitcoin ETF?

The English full name of ETF is "Exchange-Traded Fund", also known as "traded open index fund".As an investment category, it has a history of 25 years. As of August 2018, the global ETF assets have reached 4.8 trillion US dollars, which is a very mature financial derivative.

When you buy ETF products, you don't buy actual assets, you buy indices that track the prices of multiple assets.

Take the gold ETF as an example, the gold ETF foundation invests most of the money in gold assets, so the ETF price and the gold price are closely linked. If you buy the gold ETF, it is equivalent to investing in gold. At the same time, ETF can be traded in the stock market, with low investment threshold (a few hundred yuan can be traded), low commission, good liquidity, simple trading operation and so on.

Bitcoin ETF refers to the gold ETF, and the principle is similar.

02 What does it mean that Bitcoin ETF can pass through SEC in the United States?

If Bitcoin ETF can be censored and officially launched by SEC in the United States.On the one hand, it represents compliance.It also means that existing investment institutions and individual investors can purchase bitcoin ETF directly on the stock exchange.Greatly lower the investment threshold of the encryption marketYou don't need to actually buy and keep bitcoin assets, let alone bearKeyDepository risk of。

To put it simplyIf Bitcoin ETF is officially launched, it may become one of the options for institutional and personal asset allocation, attracting considerable incremental funds for the cryptocurrency market.We can imagine what the result of the increase in admission funds will be.

Some bigwigs have expressed similar optimism:

Tim Draper, founder of Defengjie Fund: Bitcoin ETF will be approved within a year or twoThomas Lee, founder of Fundstrat: if Bitcoin ETF is likely to be approved, it will probably bring Bitcoin back to an all-time high.

Therefore, it is not difficult to understand why the market is looking forward to the approval of Bitcoin ETF.

However, in a financial market with insufficient capital, the problem of lack of liquidity is the most likely to occur, resulting in transactions can not be completed quickly. In addition, because the market capitalization is small, the market price is easy to be manipulated, and the supervision of the cryptocurrency is not perfect.Enough to hold back the money of many traders and institutions.

SEC of the United States also issued an open letter for the above reasons, rejecting the application of Bitcoin ETF many times.

03 Conclusion

However, the hope that the US SEC will pass bit ETF may be the "wishful thinking" of many existing investors in cryptocurrency.

Since 2014, when the Winklevoss brothers, the owners of the Gemini exchange, first submitted their applications to the US SEC, so far, the US SEC has rejected the Bitcoin ETF application more than a dozen times, citing the aforementioned reasons such as "market manipulation, fraud, and difficulty in protecting investors and the public interest".

What do you think will be the impact if the US SEC passes the Bitcoin ETF? You are welcome to leave a message in the message area.