The first ever Bitcoin Exchange-Traded Fund (ETF) is set for 2019 and this will be a milestone for the whole crypto community and the crypto industry as a whole. Crypto ETFs are among the most discussed topics in the industry and many believe that Cryptocurrency Exchange-traded Funds will skyrocket the prices with immense amounts of volume from institutional investors. Other experts are warning about an increase in volatility in the crypto markets due to that immense volume that will potentially hit the markets.
A Bitcoin Exchange-traded Fund (ETF) will definitely have a big impact
It will be interesting to see how the first Bitcoin Exchange-traded Fund will influence the market. However, in the long run as more and more public investors’ funds hit the crypto markets, the better Bitcoin’s liquidity will become. The volatility is hard to avoid, but after a turbulent period of time, the volume and the liquidity of Bitcoin could come to a state of balance where the market would become too difficult to manipulate, but not impossible. The price trend will always be susceptible to manipulation, because the crypto market is the model of the free market. Especially in periods of instability and rapid increases in volume, large investors have the power to overturn the price trend.
But the hype for a Bitcoin Exchange-traded fund isn’t new. There were multiple previous instances where positive or negative news about a Bitcoin Exchange-traded Fund or even hype, influenced Bitcoin’s price and investors’ actions. This is a great example of just how sensitive the Cryptocurrency free market is. That’s why many cryptocurrency and economy experts are warning of the possible volatility that will be introduced to the markets and the power that large and corporate investors will have over the cryptocurrency markets.
This will open up a new balloon territory that every investor should be aware of, but the rapid increases in Bitcoin’s price will directly correlate to the whole Cryptocurrency market cap. Since most cryptocurrency prices are not their prices in fiat currency, but their Bitcoin and Ethereum prices, the increasing Bitcoin price will directly increase the whole market cap and altcoin prices. It is also possible that the price of Bitcoin can potentially swing up and down by large margins every day, due to the US day cycle.
Are Bitcoin ETFs a risk that we have to take or an opportunity for skilled investors?
Andreas M. Antonopoulos is a technologist and an entrepreneur that has become one of the most well-known figures in the Bitcoin and Cryptocurrency industry. He made a great video on the topic in his youtube channel and had very interesting opinions to give. He said:
“Everyone is so excited about Exchange-traded Funds. What we have seen in other markets is that when an Exchange-traded Fund become available to a lot of people, the price really increases dramatically, because of just how sudden everything is and investors pile on to buy. But, the other side of it, is that there are always these claims that the commodities markets are heavily manipulated and opening up these ETFs only increases the ability of institutional investors to manipulate the prices of commodities.