Bitcoin ETF:- Make or Break?

It is still a few days after the good news of BTC ETF been approved by the SEC. Most people are still wondering why the price of BTC has not been pumping yet. Personally for me, it is not thing that is worth pondering about because that is the nature of investing in crypto. Buying into ETF is not as similar to buying the real thing that it is supposed to mirror. Basically what it means is that the investors of BTC ETF are not exposed to the risk of owning the real thing.


Reference: https://www.investopedia.com/terms/e/etf.asp

Personally, for me it is a backward mentality. Supposed that a BTC investor bought $1,000.00 worth of BTC, loss $100 dollar total worth because of a dip, then that investor's BTC worth is only at $900.00. The same could be said about the investor who invested in BTC's ETF. There go, the risk of losing money is there. What the ETF is for is to reduce/remove the risk of mishandling of the assets by the assets owners. If you do not wish to have your BTC gone due to hack, scam, loss password and more, buy the ETF. The downside of it is that although your name share a "x" amount of BTC in the ETF, you do not personally own the real thing. Unlike investors of BTC, they truly own their own BTC. Or should I say the true owner of the key to the treasure box (hot wallet).


Reference: https://pixabay.com/photos/finance-currency-bitcoin-crypto-3333927/

It is also worth mentioning that unlike Bitcoin itself, the ETF counterpart is regulated as any other ETF/Tradfi Funds. Which could also mean that it comes with certain type and amount of fees. Entry fee, Exit fee, Handling fee, transfer fee, and etc you name it. I mean that is how the ETF managing companies earn their cut. While Bitcoin owners are subjected to transfer fee, it is also important that in certain countries, the earning from the purchase of BTC is taxed. Did I mention the BTC ETF individual earnings will be taxed as well? I have in the past invested in trust funds and the fee cuts are in the form of "%". So it means that the larger your earnings are, the larger the fees will be.

Quoting an article titled "Bitcoin ETFs Explained: What Are They & How Do They Work?' from Coindesk,

"The value of a bitcoin ETF's shares reflects the performance of bitcoin. As the price of bitcoin moves, the value of the ETF shares adjusts accordingly.

To ensure that the ETF shares stay in sync with bitcoin prices, market makers actively buy and sell, maintaining a balance between supply and demand. If the ETF’s price starts deviating from the actual bitcoin price, market makers step in to restore equilibrium – earning a profit in the process. "

The later paragraph made me cringe. Especially "market makers actively buy and sell, maintaining a balance between supply and demand", because it made me think "one wrong step and everything will crumble down". Of course if the market makers itself is automated just like how it is with CEXs, it should be fine. But it does made me raise another question in my head:- While the investors of the ETF are not exposed to any other type of risks aside from the price fluctuation, will it become the catalyst of the price manipulation by those mega financial corporates? It will. And it seems like most of those Finance corporations are waiting in the sideline to buy in. With their privileges' of buying over the counter (OTC), the price of BTC will not swing at all. If you see the news headline of "Company X bought X amount of BTC", be wary:- chances that these mega financial corporation is trying to pump the market just to dump it.


Reference: https://pixabay.com/photos/smiley-emoticon-anger-angry-2979107/

To be honest, there are more bad news than there is good news in regards to the ETF. When does involving the mega corporation in any level of business, is proven to be beneficial for the end users? Almost none.

Well, I do hope that in the end that the real BTC, that was supposed to be the symbol of our own personal sovereignty against the grip of those who are going the miles to control us, will not be corrupted by the lust for power and wealth by the powers that be. Then again, who knows what will actually happen in the future. What I know is that, I'm not looking forward to the pump, but looking for the opportunity to buy more crypto at the dump side of the market.

Thanks for taking your time to read. Until next time.

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