ETFs on the Horizon - Gold all over again? by meno

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· @meno · (edited)
$15.55
ETFs on the Horizon - Gold all over again?
<div class="text-justify">
Some are drawing some parallels here and I don't blame them. In truth as different as markets may be, human psychology is probably the main constant we could or should be attempting to analyze. However, the way the gold market behaved, does seem curiously similar. 
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<a href="http://www.bitcoinbulls.net/bitcoin-etfs-are-coming.html">img src</a>
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I realize there are more than a few Steemians that read these headlines and have little clue as to what it is, or what it could mean. After all ETF's are a common product of the stock market and something completely alien to the cryptosphere. It's not incredibly hard to find information about it, but as with many other things of the financial world, some of the descriptions are heavy handed on the wording.

<h5>Investopedia</h5>
> A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.

The simplest explanation I could give someone who is not interested in learning about these financial products is a lot simpler. Think of an pool of investment, many companies, many investors, getting their funds together into one common pool. The ownership of this pool is split into shares, and these are traded in the same way all stocks are.

This simple shift would allow traditional investors, like the ones who deal with Ameritrade or E*Trade for example, to invest in cryptocurrencies without having to learn wallets, encryption, ledgers and all the technological challenges most investors on the world stage have absolutely no interest in learning. (at the moment that is)

<h1>More Liquidity</h1>
The logic here is very simple. The more people who engage on a market, the more liquid the market is effectively. On ramps for crypto like Coinbase, Gemini and possibly Bittrex in the near future are possibly not enough to service the whole world. Competition, and ease of access are things absolutely necessary for cryptocurrencies to reach mass adoption.In simple terms the two upcoming ETFs would allow absolutely anyone comfortable with buying stock, to participate of Bitcoin painlessly.

<h1>Less volatility</h1>
This assessment is possibly more speculative, but the argument is sound. Normally in traditional investing there is a heftier number of long term investors over the short speculative day traders. Hopefully this modus operandi would continue to be so even when it enters the extremely volatile world of cryptocurrencies.

We can also assume other financial products will be developed to facilitate long term investing. But of course at the moment options or other common products one would expect are not being discussed.

<h1>The comparison to Gold</h1>
Is very interesting to me, because if you do some digging some of the challenges gold had to endure prior to its "bull run" are very similar to what Bitcoin is facing with today. 

Before Gold's ETF launch many traditional investors sat on the sidelines waiting for it to get easier. They could buy gold, store it and what not, but the cost of storage, transport and even knowing where to buy was a market for people who really wanted to become specialists. Drawing the parallels is not hard at all, wouldn't you say? 

I'm sure there will be people on both sides of the conversation, those who like me are feeling pretty good about this, and those who are upset regulation is sure to creep up some more. However, anyone who transacts in honesty should be able to recognize the potential of the shift.
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Here is to hoping....


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<h5>Other posts by yours truly</h5>
<a href="/steemfest/@meno/has-anyone-even-asked-ned-steemian-festivals-steemfest-3-dilema"><sub>• Has anyone even asked Ned? - Steemian Festivals - SteemFest 3 Dilema</sub></a><br><a href="/steem/@meno/random-thoughts-on-the-futile-quest-of-spammy-comments"><sub>• Random thoughts on the futile quest of spammy comments</sub></a><br><a href="/steem/@meno/steem-abuse-finding-patient-0"><sub>• Steem Abuse - Finding Patient 0</sub></a><br><a href="/steem/@meno/snyq59zn"><sub>• Another way to look at it - HODLing assistance series</sub></a><br><a href="/steem/@meno/lkpmra8i"><sub>• The Advantage of Steem - HODLing Assistance Series </sub></a><br>
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vote details (81)
@riskainaya ·
Siapa yg ada main steemit kalau mendaftar link di bawah ini akan mendapat uang dolar

https://steem-byteball.org/#OU7YURVUKD6PV5SVU544BNIGBI5ZEYSF
👎  
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@k0wsk1 ·
$0.04
THANKS FOR THIS! I was wondering what the hell the ETF thing was all about, your description helped a bunch. Cheers!
👍  ,
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@meno ·
$0.02
glad it helped you brother! hope all is well :)
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@k0wsk1 ·
Couldn’t be better @meno! At the Gorge Ampitheatre this weekend, seeing Phish!

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@crypto-luke · (edited)
Good point. If really in August the bitcoin ETFs get approved, we will have strong capital inputs on the crypto market. ETFs are different from futures, since they really own the underlying. As usual, let's see what happens this time...
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@meno ·
I've read somewhere that the effect of them, that is, the real effect, might be a bit later, but there should be a bull rally prior to launch as per usual (fomo kicking in)
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@coinjive ·
I am not sure if ETFs will influence the rates. Those still has to be backed up by actual bitcoins? So financial institution who'll be selling ETFs has to purchase BTC prior to that, right?  And all big guys are buying of the counter - so we can't really see such price movements that we've witnessed in December.  Just a thought...
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@meno ·
the idea would be that the fund would be purchasing massive amounts of crypto, the papers (stocks) would be used to secure more assets for the stock holders as they go up in value. In other words, the people purchasing the crypto would not be the same who are buying the stock, but the managers of the funds. And they would use the liquidity of their asset, the ETF shares, to purchase crypto.
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@coinjive ·
That's what i was saying - there would be a specific amount of crypto purchased by a very reach people who are buying off the counter - so the order wouldn't be  shown on any exchange - therefore there's no reason for prise decrease/increase
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@itstime ·
Minor correction , ETF stands for

E - Prebook

T - your

F - Lambos


https://media.giphy.com/media/Rg2chPrRYS3du/giphy.gif
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@meno ·
Interesting way of spelling there my friend... hahahhaha
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