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Bitcoin ETF Proposals Possess Substantial Market Influence

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Bitcoin ETF

This article aims to ensure that all market participants understand the significance of a potential Bitcoin ETF, what exactly such an ETF entails, when the first ones are likely to be launched, and how they will impact the overall market.

ETFs Defined

Exchange-traded funds, commonly known as ETFs, are a traditional investment vehicle offered on all major stock exchanges around the globe. They allow exposure to an underlying asset or basket of assets offered in the form of a security that is proportionally represented by the fund’s shares. Most importantly, they allow exposure to a market without needing to physically hold or store the underlying asset. ETFs have become one of the most popular methods for passive investment by the masses in the capital markets.

As ETFs allow an individual to buy a basket of multiple assets, they mitigate strong price swings which individual stocks often suffer from, especially in the incredibly volatile cryptocurrency market. Any losses from assets which do not meet up to their promise are counterbalanced with assets which have performed particularly well and the growth of the overall industry during that period. Driving up the funds share price over time. The notorious investment tycoon Warren Buffett once proved the power of ETFs with a successful bet that the S&P 500 would outperform a collection of well-regarded Wall Street hedge funds over the period of a decade. His victorious bet displayed to the masses the power of such funds.

Bitcoin ETFs Market Impact

Bitcoin ETF ProposalsOne of the major barriers to mainstream investor fund inflows into the blockchain ecosystem has been the lack of institutional investors’ ability to purchase assets using traditional methods. Many do not understand that such market participants are simply not going to risk their capital on unfamiliar and unregulated cryptocurrency exchanges.

Instead, institutional money will enter the space once they can acquire cryptocurrencies without needing to hold the underlying asset, in a highly regulated and fully insured manner. Thus, for institutional investors crypto ETFs mitigate the risks of the industry whilst allowing them to profit from one of the greatest financial revolutions of our time. 

Although the impact of such institutional investors on the market will likely be of a speculatory nature in the first instance, this huge influx of money to the market will bring much-needed market exposure. The media love to shame the cryptocurrency ecosystem as much as feasibly possible, calling it a scam or a fad on a regular basis.

Institutional money would bring credibility to the entire industry and allow well-respected entities who have been quietly investing in the cryptocurrency space to come out of the woodwork and into the spotlight. Ultimately, this could lead to mainstream cryptocurrency adoption long term, as a result of the perceived integrity of the industry as a whole, and, potentially, a massive boost for the price of bitcoin.

Bitcoin ETF Calendar

Issuer Company Filing Date Status SEC Date
“Physically” Backed by Bitcoin Holdings
Winklevoss Bitcoin Shares Winklevoss Cap Mgmt 01/07/13 Denied 26/07/18
VanEck SolidX Bitcoin Trust VanEck & SolidX 05/06/18 Postponed 30/09/18
Bitwise HOLD 10 Cryptocurrency Index Fund Bitwise 24/07/18 Awaiting Approval Unknown
Derivatives Based
GraniteShares Bitcoin ETF GraniteShares 15/12/17 Denied 15/09/18
GraniteShares Short Bitcoin ETF GraniteShares 15/12/17 Denied 15/09/18
Direxion Daily Bitcoin 1.25X Bull Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 1.5X Bull Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 2X Bull Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 1X Bear Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 2X Bear Direxion 05/01/18 Denied 21/09/18
Evolve Bitcoin ETF Evolve Funds 21/09/17 Awaiting Approval Unknown

The table above displays cryptocurrency ETFs that are currently laying the foundations for their approval. Such firms are on a waiting list ready for their hearing with the U.S. Securities and Exchange Commission (SEC), who will ultimately determine their fate. The Winklevoss twins’ fund has already been turned down for the second time as of July, 26. Following this, the SEC has denied a following nine applications, predominantly from Derivatives based ETFs such as GraniteShares and Direxion. Such a decision results from their perceived inability to provide significant liquidity due to their market size, which could lead to significant market manipulation.  

BitcoinDespite such dismissals, the most important ETF which market participants should be fully aware of is the VanEck SolidX Bitcoin Trust who plans to release their ‘physically’ backed ETF on the Chicago Board of Options Exchange (CBOE). Recently, the SEC hearing date was postponed to the 30th of September. The CBOE has true industry influence as the largest options exchange in the world and has proven itself in the cryptocurrency market by introducing Bitcoin futures in December 2017. They have meticulously studied the failures of all previous ETF denials and reviewed their application accordingly. If an ETF is likely to get approved this year, this will most likely be the one.

Despite all the hype, some sceptics suggest that ETF delays are usual, with Copper being the last ETF to pass through the SEC. With their reasoning, the likelihood of an ETF being approved in 2018 is minimal. However, regardless of whether a decision happens in the next few months or not, the market has certainly been responding rapidly to both positive and negative news. The first Winklevoss twins ETF denial news caused a flash crash which quickly corrected, whilst the delay of the major CBOE proposal caused a more prolonged fall in bitcoin’s price. Ultimately, the market appears to be in a stalemate until a further delay, approval or disapproval occurs. The latter could cause a long-term downtrend, whilst an approval could see prices increase exponentially. As September, 30, looms, the market tension builds. Be sure to have a plan for all situations to ensure one maximises or minimises the ETF decisions’ impact on the market. 

This guest post was contributed by Adebayo Juwon, Country Manager (West Africa) at BBOD.io.

*Readers should do their own due diligence before taking any actions related to the company, product or service. BitcoinAfrica.io is not responsible, directly or indirectly, for any loss or damage caused by or in connection with the use of or reliance on any content, product or service mentioned in this guest post.*

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Zimcoin Launches New Cryptocurrency Exchange in Zimbabwe

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Zimbabwean blockchain technology company, Zimcoin, has launched a new digital currency exchange that will allow users to buy and sell bitcoin (BTC).

The Future of Zimcoin

Zimcoin hints at the possibility of much larger projects in the future with its bitcoin exchange acting as a gateway:

“At Zimcoin we want to provide Zimbabweans with access to the new decentralised internet. Bitcoin acts as a gateway to all the exciting projects happening in the cryptocurrency and blockchain world. Whether you want to engage with the prediction markets of Augur or invest in the Decentralised Autonomous Organisation Decree, Bitcoin is a great starting point. Here at Zimcoin, we provide a platform to buy and sell Bitcoin, as well as a place to find out about the blockchain projects we are excited about. So what are you waiting for? Sign up today and become a pioneer in Zimbabwe’s love affair with Blockchain.”

When Golix was operating in Zimbabwe they faced minor incidences of security breaches and scares. It seems that Zimcoin is learning from their mistakes and trying to avoid that from the start.

ZimcoinZimcoin has already implemented two-factor authentication from day one, unlike Golix which only implemented a few years after operating. With Zimcoin’s 2FA you are given two options; an email or using Google Authenticator. Though the email is less secure than Google authenticator, you do not have to download a separate application.

The exchange also logs out after a period of inactivity, which means incidents such as someone getting access to your computer because you’ve gone out are also unlikely as well.

The Challenges of Cryptocurrencies in Zimbabwe

Earlier this year, the Reserve Bank of Zimbabwe had classified operations by cryptocurrency exchanges as illegal in the country. This greatly affected Golix, Zimbabwe’s largest crypto exchange, despite them winning interim relief.

According to a report by TechZim, Zimcoin is not overly concerned by this ban and say that they had been in communication with the RBZ since last year and feel that they will be able to operate without any trouble.

Meanwhile, Zimbabwe is struggling with its economy, and as its foreign reserves dwindle, which will likely positively affect Zimcoin’s growth as more Zimbabweans start to look towards other currency alternatives. 

Despite all the challenges Zimbabwe faces with cryptocurrencies, the blockchain is gaining popularity in Zimbabwe. This is good news for companies like Zimcoin as they will hopefully face fewer problems than their predecessors.

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Bank of Zambia (BoZ) Warns Against Using Cryptocurrencies

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The Zambia central bank, Bank of Zambia (BoZ), has cautioned citizens about the use of digital currencies as they are not considered legal tender.

According to local media, the Bank of Zambia has received an increasing amount of inquiries about cryptocurrencies, which is a testament to the growing interest in bitcoin and its peers in the Southern African nation.

Bank of Zambia

The central bank highlighted that there is no legal recourse for cryptocurrency holders or investors who lose money in this new digital asset class due to its unregulated nature.

Additionally, the Bank of Zambia stated that it does not oversee, supervise nor regulate cryptographic currencies and assets and that any actions in related to cryptocurrencies are performed at the user’s own risk.

This statement echoes that of most African countries’ regulators when it comes to bitcoin regulations.

In most of Africa, central banks are taking a wait and see approach to blockchain technology and cryptocurrencies in an attempt not to stifle innovation.

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Binance Uganda Officially Launches and is Starting to Accept Deposits

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Binance Uganda
Images by Binance Uganda

In a statement on its website, Binance Uganda announced that is officially opening its doors on October 17, 2018, when it will start accepting deposits in Ugandan shillings (UGX), bitcoin (BTC) and ether (ETH).

Uganda’s First Local Fiat-to-Crypto Exchange

Binance Uganda is the first local fiat-to-crypto exchange in the East African nation and marks a milestone in Binance’s push into the African market.

Binance UgandaBinance Uganda users can now complete full account verification and are able to start depositing funds in UGX, BTC and ETH starting from 2018/10/17 10:00 AM Uganda Time (EAT).

The first available trading pairs on Binance Uganda will be BTC/UGX and ETH/UGX trading pairs. The start time for trading will be released in a later announcement.

Until the launch of Binance Uganda, local bitcoin investors had very limited options to convert their shillings into bitcoin or other digital assets and vice versa.

Peer-to-peer trading platforms such as LocalBitcoins and Paxful have failed to take off in Uganda and international exchanges do not accept Ugandan shillings as a currency, which has left Ugandans to largely trade via WhatsApp and Telegram on a peer-to-peer basis.

With the launch of Binance Uganda, it will be interesting to see how the local cryptocurrency community evolves and whether bitcoin and ether will be accepted as legitimate investment assets by the country’s wider investor base.

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