(AI Video Summary)
The Bitcoin ETF
The Bitcoin ETF, a type of investment fund, was approved a few weeks ago. On its first day, the 10 new funds together brought in around $4.7 billion. However, the price of Bitcoin has since dropped by about 18%. Hector McNeill, who helped create the first gold ETF 20 years ago and is now the CEO of HAN ETF, discusses how these two types of ETFs are similar. He thinks ETFs are valuable because they allow people to invest in assets that are typically difficult to trade. Additionally, ETFs offer protections and are regulated, unlike the crypto world. McNeill hopes that the approval of the Bitcoin ETF by the SEC will encourage regulators like the UK’s Financial Conduct Authority (FCA) to be more open to cryptocurrencies.
One advantage of ETFs, according to McNeill, is that investors can have a regulated product and combine all their investments in one place. Currently, the FCA only allows professional investors to access Bitcoin through a special product called spot Bitcoin. However, retail investors have other options like proxies. McNeill hopes that the FCA will eventually see the value of regulated products in providing investor protection and the ability to trade cryptocurrencies.
McNeill uses the example of the first gold ETF to explain how ETFs can make an asset more accessible. Before the gold ETF, people had to physically own gold, which was inconvenient for online businesses. The gold ETF allowed people to own gold on a shared and fractional basis, backed by good delivery bars. In the same way, McNeill believes that the Bitcoin ETF will lead to a wider adoption of Bitcoin. This will make Bitcoin less speculative and more of a long-term investment and diversifier for portfolios. Although the price of Bitcoin will still have some ups and downs due to limited supply, McNeill predicts a steadier rise over time.
McNeill also suggests that Bitcoin is chosen by many people as a store of value and a hedge against the conventional financial system, just like gold. He believes that the technology behind Bitcoin makes it function well as a currency, and that criticisms of Bitcoin, such as money laundering, also apply to traditional currencies. As more people adopt Bitcoin, McNeill thinks central banks and governments will need to find ways to digitize their currencies. In terms of accessing Bitcoin in the UK, McNeill mentions the KOIN ETF, which provides exposure to companies heavily influenced by the price of Bitcoin. He thinks this is a good option for retail investors and expects more ETFs for other cryptocurrencies like Ethereum in the future. Overall, McNeill sees parallels between the gold ETF and the Bitcoin ETF, and believes that the wider adoption of Bitcoin will lead to a more stable and valuable asset class.