jakiro
Author: Dan Held, Head of Business Development, Kraken; Translation: Bitchain Vision xiaozou
Bitcoin spot ETFs are approved today and can be traded tomorrow.So, why are Bitcoin ETFs so important?
1,friction
ETFs greatly reduce trading friction to almost zero.You don’t need bank transfers to Kraken, you don’t need KYC/AML process, you don’t need to know how orders work, and you don’t need to be proficient in key management or security-related knowledge.
2, retirement account
Although you could have used a self-directed IRA to buy Bitcoin, the process is difficult and expensive.Now, in just a few clicks, trillions of dollars can be flowed into Bitcoin.
3, Institutional Investors
ETFs legalize Bitcoin and allow institutions to hold Bitcoin through their existing services.Financial advisors can now easily incorporate Bitcoin into their portfolio.Since Bitcoin is not very relevant to many traditional assets and is very volatile, adding ETFs to your portfolio (such as 1%) will give you a better performing Sharpe Ratio.Without thinking too much, adding ETFs to your long-term asset management strategy is a wise move.
4, derivatives and hedging
After the ETF is released, options trading will be available, and anyone can hedge their existing Bitcoin positions using a bull/put option, or you can also bet on the price trend.
5, solve the problem of unit deviation
As we have seen in Doge, Shiba and other meme coins, when people have a position of XXXX instead of 0.XXX, a large supply makes them feel richer.Humans tend to think about problems with integers rather than decimals.
The share price of a Bitcoin ETF can be of any value.For example, $1.Retail investors will flock to them because they can own hundreds of “bitcoin stocks”.What most people don’t know now is that they can buy only a portion of Bitcoin.They believe that the $45,000 price is “too expensive” compared to the market capitalization.
6,in conclusion
When influx of massive purchases encounter a fixed supply, the price trend will only be in one direction.
This may not happen immediately, or may not happen within 1-2 months, but I believe the next 6-18 months will definitely be crazy.
