Bitcoin is beginning to successfully integrate into more and more parts of the traditional finance sector, but pro-bitcoin investors believe that there is still potential to increase the interconnectivity between bitcoin and fiat economies. One of the most significant ways that bitcoin is currently being integrated is through the introduction of bitcoin exchange-traded funds, or ETFs. Put simply, ETFs are investment funds traded on stock exchanges in ways that mimic the stock market. Most ETFs track a stock index and are useful because they present a way for investors to hold and trade assets close to their net value. ETFs are popular because they have low costs, tax efficiency and stock-like features.
There are currently two big bitcoin ETFs that are gaining popularity. The first, called the Bitcoin Investment Trust, or BIT, is the biggest on the market. The fund has successfully grown, and currently holds around 70 million dollars in assets. The second fund, managed by the Winklevoss twins, is still being reviewed by the SEC and is looking to take a different approach. The Winklevoss Bitcoin Trust, which will go by the ticker symbol COIN, wants to attract more casual investors who are interested in bitcoin. Analysts believe that COIN has a good chance of attracting new bitcoin investors and will renew enthusiasm for the cryptocurrency, possibly spurring a price rise.
One of the biggest barriers to widespread acceptance of bitcoin in the traditional banking sector has been investor concerns about price volatility. The price of bitcoin, which fluctuates greatly on a day to day basis, has deterred those looking for a more stable investment. The rise of bitcoin ETFs, however, may be the key to changing investor attitudes about bitcoin’s potential as a legitimate investment. These ETFs, if successful, will provide a more definitive indication of bitcoin’s future success as a tradable investment.