What exactly is the BTC SPOT ETF.

On Wednesday, Jan. 10, the Securities and Exchange Commission (SEC) approved the first-ever spot Bitcoin ETFs, including those from Fidelity, BlackRock and Invesco. In total, the SEC approved 11 spot Bitcoin ETFs, and they started trading on Thursday, Jan. 11.

-Sam Taube

Firstly, it means Exchange-Traded Funds.

An ETF is basically an investment fund or safe to refer it as a type of investment fund that is tradable on stock exchanges.

With cryptocurrency comes a lot of uncertainty as a result of its volatile nature, plus the idea of the integration of the blockchain is still new in gaining prevalence.

Now, while many may have shared their success stories as well as breakthroughs in innovation and ideas brought about by the implementation of the blockchain technology, it is quite unfortunate that bad publicity usually has the most press. This reason alone has most traditional investors factor on the risks associated with the volatile nature of the crypto market.

This brings us to the general idea behind Bitcoin ETFs.

Now while this is a great idea and considered as a bullish news as it aids mass adoption and intent recognition on the crypto market generally.

Here’s how it works:

“An asset management company purchases BTC and stores it with a custodian and goes ahead to issue shares that allows investors the option to buy.”

Makes no sense right?

Unless that it actually makes sense, with the ETF, individuals are able to trade BTC on traditional stock exchange markets rather than on crypto exchanges.

With the spot ETF, this implies that the price of the shares is directly proportional to the price of bitcoin at any given time. If the price of Bitcoin increases so does the shares and vice versa.

This is considered a great idea and a bullish news as it aids mass adoption and intent recognition on the crypto market generally.

This is the miracle of the co-relation of decentralization and centralization.

Many are worried that decentralization as one of the major aims of the blockchain may lose effect as centralized authorities would be able to control ownership of bitcoin, is this truly possible?

Let me know what you think!

I am Jen, a content writer that shares Indepth insight on Crypto.

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