Buy Bitcoin like buying funds. The first Bitcoin ETF is expected to be listed.

Recently, there has been a lot of news about the world's first Bitcoin ETF being listed.

It is reported that the US technology company SolidX Partners has submitted a listing application to the US Securities and Exchange Commission (SEC), intending to arrange for the Bitcoin ETF it is organizing to be listed and traded on the New York Stock Exchange.

Niu Mei checked public information and found that SolidX Partners is a company that specializes in providing blockchain identity authentication services, and blockchain is the core technology of Bitcoin. The ETF product applied for by the company this time will be called SolidXBitcoin Trust, with the stock code XBTC.

Here, Niu Mei wants to give some scientific knowledge to friends who are not familiar with funds:

The so-called ETF (Exchange Traded Funds), also known as an exchange-traded open-end index fund or exchange-traded fund, is an open-end fund that is traded on an exchange and has variable fund shares. It can be subscribed or redeemed, and can be traded in the secondary market like stocks, and the buying and selling price is its market price.

SolidX Partners also stated in the application that it will provide investors with daily changes in the dollar price of Bitcoin, and the price of its ETF product will fluctuate with the changes in the price of Bitcoin. Niu Mei learned that the exact size of the first Bitcoin ETF product has not been disclosed, but in the filing, SolidX Partners stated that it will issue 10,000 shares.

A senior Bitcoin player told Niu Mei that he did not think the launch of a Bitcoin ETF would significantly drive up market prices: "The recent surge was mainly due to the expectation of a halving in production. After the halving, prices were quiet. And this is not the first time that news of a Bitcoin ETF has been reported."

As the player said, as early as 2013, the Winklevoss brothers, who were well-known to the public for suing Facebook CEO Mark Zuckerberg , proposed the idea of ​​the first Bitcoin-related securities product and submitted an application to the SEC. In the following years, they have been working hard to get regulators to approve the establishment of a Bitcoin ETF.

Two years later, ARK Network X.0 ETF, an Internet -themed fund under the US ARK Investment Management Company, purchased Bitcoin assets for the first time, becoming the world's first ETF to own Bitcoin assets in some form.

Of course, it should be clear that ARK ETF did not invest directly in Bitcoin, but instead invested in a Bitcoin investment trust company . Therefore, if the SolidXBitcoin Trust is successfully listed, it will become the first Bitcoin ETF in the true sense.

  Gimmick or good news?

Although news about the establishment of a Bitcoin ETF appears in the market every once in a while, each time it appears it will cause heated discussions among industry insiders and investors.

Barry Randall, investment manager of asset management agency Crabtree, publicly stated that securities such as Bitcoin ETFs are detrimental to both Bitcoin and its supporters. He pointed out: "Since the (current and final) circulation of Bitcoin is ultimately limited, this ETF will create a demand bubble, thereby further pushing up the value of Bitcoin. This in turn will inhibit the circulation of Bitcoin, thereby weakening the monetary effectiveness of Bitcoin."

Some people hold different views. Many industry insiders interviewed by Niu Mei regard the application for the establishment of a Bitcoin ETF as "a good market signal."

A senior executive of Huobi.com and former VP of Goldman Sachs Hong Kong told Niu Mei that if the SEC approves the listing application of Bitcoin ETF SolidX, it means that it can be legally traded on regular exchanges. There are QDII funds in China to invest in overseas markets, so it can be expected that QDII funds will raise domestic public funds to invest in overseas ETF SolidX in the future, which also provides domestic investors with another more regulated way to invest in Bitcoin.

"If the listing is successful, then in the near future fund companies will be able to raise public funds in a legal and transparent manner to invest in Bitcoin ETFs, thereby indirectly injecting a large amount of funds into the Bitcoin market. This is a very good market signal."

A person from a large public fund also said that ETFs are exchange-traded funds that can be subscribed and redeemed in the primary market and traded in the secondary market. The fair price of ETFs often deviates from their actual prices, so this may provide ETF arbitrageurs with a new arbitrage strategy - the Bitcoin ETF arbitrage strategy.

He said frankly: "If this ETF can be successfully issued, although it will not be of much help in directly increasing the liquidity of Bitcoin itself, it will facilitate more people to invest in Bitcoin."

  Risks that cannot be ignored

Many people pointed out in interviews that the SolidX ETF uses Bitcoin as its underlying asset, which naturally means that Bitcoin's leading position in digital currencies will be more solid. If the Bitcoin ETF is approved by the SEC, it will boost confidence in the entire Bitcoin and even digital currency industry.

In fact, the discussion about digital currency has a long history both at home and abroad. Just this month, the Bank of England just released a research report, pointing out that if the digital currency form of the existing legal currency is introduced, the Bank of England will continue to increase the country's GDP by 3%. Haldane, chief economist of the Bank of England , also suggested that the Bank of England could consider issuing a digital currency based on Bitcoin technology: "Bitcoin's distributed payment technology has real potential. It solves a profound problem in monetary economics:

How to build trust in a decentralized network, which is the essence of money. "

  In China, since the senior officials of the central bank talked about digital currency and the underlying technology of Bitcoin, blockchain, in public at the beginning of the year, it has also attracted great attention and heated discussions from industry insiders and the general public . However, an asset management person from a state-owned bank told Niu Mei that at present, more practices are still "digitalizing" paper money, and the real "digital currency" is far from being a system. "It will take some time to solve the problems in the financial system, logic and even behavioral science, and we must also pay attention to related risk control."

The above-mentioned Huobi executive said that since the ETF still corresponds to the prices of major mainstream Bitcoin exchanges, the corresponding risks are inevitable. For example, the Bitcoin market is still a niche market, and the price fluctuations are greater than other trading products, so its ETF products will inevitably have corresponding problems. "Investors should have full risk awareness when investing in Bitcoin ETFs."

Secondly, when the market is not familiar with Bitcoin ETFs at the beginning, trading liquidity may be relatively poor, that is, the purchased ETFs may not be able to be sold quickly, or it may not be easy to buy ETFs if you want to.

In addition, the credit risk of Bitcoin exchanges is also worth paying attention to. If a mainstream exchange suddenly runs away or encounters other problems, resulting in poor Bitcoin liquidity and a significant deviation in price from other exchanges, this will affect the fair price of the ETF. "The fair price is transmitted to the actual price, causing the ETF price to deviate significantly from the price of other mainstream Bitcoin exchanges. This price deviation will cause trouble for investors."

As a disruptive innovation, Bitcoin is still in its infancy, but the interest from Silicon Valley, Wall Street and management in various countries is increasing. Whether the Bitcoin ETF can be successfully established and what results will emerge in the future requires long-term observation!