A court ruling siding with Grayscale Investments is a big boost of support for the eventual launch of an exchange-traded fund that tracks bitcoin.
This ruling is incredibly important as it could pave the way for the first U.S. bitcoin ETF.
This would make it easier for institutional investors to buy and sell bitcoin, and likely increase volumes of trading.
But is all this still going over your head?
Allow us to reintroduce you to a few concepts
Bitcoin
bitcoin is a digital aka virtual currency, secured by secret codes (cryptography). Other coins such as these are what we refer to when we talk about “cryptocurrencies”z
crypto + currency = cryptocurrency
Most use some form of peer-to-peer technology to operate without a central bank or single administrator.
Blockchain
Imagine you have a notebook where you keep track of all your transactions, such as buying food, lending money to your friends, or selling trainers. Every time you make a transaction, you write it down in the notebook. You also draw a line through the previous transaction so that no one can go back and change it.
This is a lot like how a blockchain works. A blockchain is a digital ledger that keeps track of all transactions. Each transaction is recorded in a block, and each block is linked to the previous block. This makes it very difficult to change or tamper with any of the transactions.
The blockchain is maintained by a network of computers. When a new transaction is made, it is broadcast to all of the computers in the network. They then verify the transaction and add it to the blockchain.
The blockchain is a very secure way to record transactions. It is also very transparent. Anyone can see the transactions that are recorded on the blockchain.
The ETF
An ETF or exchange-traded fund, is an investment fund traded on a stock exchange, which tracks an underlying index, sector, commodity, or other asset
Cold winter
A cold winter is a term used to refer to a period of prolonged price weakness and low trading volumes in the cryptocurrency market. These make it hard to recover from short and medium term losses and can be caused by a variety of factors.
Our thoughts?
To watch and wait. If you’ve ever bought bitcoin and held it for a long time, you may have noticed two things.
extreme volatility
significant “trend” following
Unfortunately, with the fogginess regarding its embrace by the big boys (institutional investors and banks), it’s hard to guess where Bitcoin will go in the long term.
The technology inspires many, because the reliance of a central agent/manager such as the central bank for traditional currencies, exposes everyone else to a certain kind of risk that is just unavoidable and overtly skewed against you (if that central agent takes a malevolent turn). In economies where these agents have indeed misused or mishandled their powers, bitcoin was an easy favourite as a substitute for individual transactions.
However, this historic role means Bitcoin has also been associated with chaos and crisis in a way that only further puts off risk-avoiding and stable investors.
With this new potential way of trading Bitcoin, that could enable and facilitate additional “normal” trading of bitcoin, not only does its wild price swings likely reduce in frequency because there are more market participants, the role of these more stable holders increases its reliability as a store of value that works to mend its reputation not only its price moves.
Again, it’s early days, but as a popularly held asset by investors from marginalised communities, we felt it vital to give you the heads up!
Happy Investing!
The MWHQ Team
What’s your next move?
- 0%I’m buying
- 0%I’m gonna wait and see
- 0%Anyone not selling bitcoin is crazy