A first! The first batch of Bitcoin ETFs were approved for issuance, and Dan Bin has already bought in! Bitcoin soared, and overseas tycoons have joined the game

Source: China Securities

Bitcoin has hit new highs, and the upward trend shows no signs of slowing down. As of 14:00 on February 18, the price of Bitcoin rose to $51,986, and the highest in 24 hours was $52,618. In the past year, the price of Bitcoin has skyrocketed fivefold.

Bitcoin is rising rapidly, and related positive factors are also being released. Since February, Canadian regulators have approved the issuance of the world's first crypto asset (virtual currency) Bitcoin exchange-traded funds, officially opening a new chapter in digital currency trading.

Recently, Canadian asset management companies Purpose Investments Inc. and Evolve Funds Group Inc. have been approved by the Ontario Securities Commission (OSC) to issue Bitcoin exchange-traded funds (ETFs). If these two products are successfully issued, they will become the world's first fund products for retail customers to invest in Bitcoin and will be traded on the Toronto Stock Exchange in Canada. This is also the world's first Bitcoin fund for retail investors, creating a historical precedent.

After 7 years, Bitcoin ETF finally launched

The road to the launch of Bitcoin ETF is full of twists and turns.

In 2013, the Winklevoss brothers, who claimed to own 1% of the world's total Bitcoin, submitted a Bitcoin ETF listing application to the US Securities and Exchange Commission. In 2014, they initially decided to list the Bitcoin ETF on the Nasdaq OMX exchange and announced the stock code "COIN" for the first time. However, during the long wait, the Bitfinex exchange was hacked, which seriously affected the listing review progress of the ETF, and the original plan to list on the Nasdaq was changed to listing on the Bats BZX Global Exchange.

However, on March 10, 2017, after three years of review, the SEC finally rejected the Bitcoin ETF listing application submitted by the Winklevoss brothers. Subsequently, the SEC successively rejected ETF listing applications submitted by SolidX, Rex Co., Ltd., Proshare Capital Management, and VanEck Currency Management. At that time, Bitcoin was repeatedly rejected by regulators due to its low price, small market value, and susceptibility to market manipulation.

It was not until February this year that two Bitcoin ETFs were finally approved in the North American market. On Tuesday, Canadian fund management company Evolve Funds Group Inc announced that its Bitcoin ETF had been approved by the Ontario Securities Commission (OSC). Previously, the Bitcoin ETF launched by Purpose Investments Inc was approved, becoming the first physically settled ETF in North America. This is also a major positive for the Bitcoin market.

Dan Bin, chairman of Oriental Harbor Investment Management Co., Ltd. and author of "The Rose of Time", said on Weibo, "I have purchased 1% of the Bitcoin ETF fund. Although it is a bit late, I will practice it once I figure it out! I hope to maintain my curiosity about new things!"

Dan Bin also said, "As Tesla allows Bitcoin as a payment 'currency', its value may be increased. The total number of Bitcoins in the world is 21 million, and 15.85 million have been mined as of July 13, 2020. If the number of long-term holders increases, or companies like Tesla continue to join, it is very likely to reach the $400,000 mentioned by ARK's 'Bull Market Queen'..."

Bitcoin, the underlying asset of the Bitcoin ETF, continued its strong rise and hit a new high after breaking through the $50,000 mark. As of 14:00 on February 18, the price of Bitcoin rose to $51,986, reaching a high of $52,618 within 24 hours. Bitcoin has risen by more than 70% this year.

Tesla invests $1.5 billion in Bitcoin

Giants are also entering the market.

According to regulatory documents filed with the U.S. Securities and Exchange Commission, Tesla has invested $1.5 billion in Bitcoin and will begin accepting Bitcoin as a payment method for purchasing electric vehicles in the near future.

Neither Tesla nor Musk has publicly explained the reasons for increasing their holdings of Bitcoin, but outsiders speculate that there may be several major factors that prompted the industrial company to take the risk of holding Bitcoin.

First of all, there is a need for diversified allocation. Tesla clearly stated in the documents submitted to the US Securities and Exchange Commission that increasing its holdings of Bitcoin is an opportunity to diversify cash and cash equivalents. The company usually holds excess cash and cash equivalents, such as treasury bills or commercial paper, to provide operating liquidity and obtain certain low-risk returns.

Secondly, it is based on the judgment of the future of the legal currency, the US dollar. After World War II, the US dollar became the world's reserve currency, but the world's reserve currency has never been static. Coupled with the general monetary easing policy around the world, Tesla's $1.5 billion investment in Bitcoin is seen as a hedge against future risks.

According to CNBC, Rick Rieder, chief investment officer of fixed income at BlackRock, a global asset management giant, said, "BlackRock has begun to get involved in Bitcoin." Earlier news, on January 21, 2021, at least two fund companies under BlackRock are paying attention to the field of cryptocurrency, and the company has approved at least two funds to invest in Bitcoin futures products. BlackRock said that assets such as Bitcoin derivatives can be used under the BlackRock Strategic Income Opportunities Fund and the BlackRock Global Allocation Fund.

Most countries remain cautious

Different countries and financial institutions have different attitudes towards the launch of Bitcoin ETFs.

In Singapore, while market regulators have been skeptical of digital currencies, incoming Bank of Singapore chief Gary Gensler may be willing to allow wider investment in the asset class. In addition, Bank of Singapore's Mohi-uddin said in the report that greater participation by institutional investors (through ETFs) would help improve liquidity, reduce volatility and make price movements more driven by fundamentals rather than speculation.

Dominic Stevens, CEO of the Australian Stock Exchange, said that the Australian Stock Exchange has taken a cautious approach to cryptocurrency-related products, but is considering using them. He said: "The current world of Bitcoin has changed dramatically, and my intuition is that Bitcoin will be dominated and adopted by more companies and institutions." Cosmos Capital is now reportedly planning to list its Bitcoin ETF on the ASX, which could become Australia's first Bitcoin-linked ETF.

US regulators are relatively cautious about Bitcoin ETFs. Many overseas institutions, such as Winklevoss Bitcoin Trust, have submitted Bitcoin ETF applications to the US Securities and Exchange Commission (SEC), but none of them have been approved. Recently, VanEck and NYDIG submitted applications to the SEC for the issuance of Bitcoin ETFs, and VanEck has made its third attempt in recent years.

IMF Chief Economist Paul Donovan said a "proper currency" can be a stable store of value, providing a certainty that it will be able to buy the same basket of goods tomorrow as it does today. This confidence comes from the ability of the central bank to reduce supply when demand falls. Most cryptocurrencies do not have a mechanism to shut down supply, so their value will slide, leading to a collapse in purchasing power.