The Bitcoin bulls are racing again. A year ago the cryptocurrency was valued at less than $12,000. Now it has passed the symbolic milestone...
The Bitcoin bulls are racing again. A year ago the cryptocurrency was valued at less than $12,000. Now it has passed the symbolic milestone of $60,000, nudging the $63,255 record it reached in mid-April before its price fell to as low as $30,000 in July.
Bitcoin’s rally over the past month is largely attributed to speculation the US Securities and Exchange Commission is poised to approve an exchange-traded fund, or ETF, based on Bitcoin futures.
So what is an ETF, and why does this matter to the value of Bitcoin?
How ETFs work
An exchange-traded fund is an investment fund, comprising a pool of assets, traded on a stock exchange. The general attraction is that an ETF offers individual investors the benefits of diversification, protection and liquidity.
Suppose, for example, you want to invest $100,000 in commercial property. You cannot afford to buy an office building or a shopping centre by yourself – and, even if you could, buying just one building would be putting all your eggs in one basket.
Here is where a funds manager with an ETF can help. The manager buys a number of office buildings and shopping centres across a range of locations. Suppose these assets cost $100 million. These are “bundled” into a fund with 1,000 units...