The author of the book “Mastering Bitcoin” Andreas Antonopoulos believes the emergence of a Bitcoin ETF is inevitable. Despite this, he insists that the long-term effect of such ventures could do more harm than good for the underlying cryptocurrency.
Antonopoulos described an ETF as a fund where the manager creates a financial instrument that can be traded as a stock without actually being a stock. Such funds are expected to hold Bitcoin and then sell shares that reflect its current price.
This investment system allows people to buy shares as shares from regular brokers and trade them on the stock market. But in this case, investors do not own Bitcoin. They simply own shares of Bitcoin, which is owned and held by the manager of such a fund. Essentially, this allows market participants to speculate on Bitcoin without actually owning it.
Antonopoulos recognizes the benefits of ETFs, but calls them temporary. As a rule, there is a sharp jump in price first as a result of the fact that such a fund makes the market more accessible to investors. Despite this, there have been examples in the past of market makers manipulating prices.
Contrary to the popular perception of ETFs as a positive sector for Bitcoin, the author of the book believes that they will only harm the cryptocurrency in the long run.
He said: “ETF fundamentally violates the fundamental principles of peer-to-peer systems, in which users do not act through trustees, but have complete control over their money because they have complete control over the keys.”
However, according to him, the emergence of a Bitcoin ETF is inevitable. This is due to the huge demand in the market and low technical awareness that exists in the ecosystem. This makes it difficult for institutional investors to directly own Bitcoin, despite their overwhelming desire to enter the market.
Antonopoulos suggests that in the future there will be two categories of institutional investors - those who will be tech-savvy and directly store Bitcoin and those who will be completely dependent on intermediaries.
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