The first-ever Bitcoin Futures was launched in October 2021, cross exchanging funds with the crypto world. In a recent interview, Jonathan Manzi, CEO of Beyond Protocol, a Silicon Valley distributed ledger technology venture, warns that enthusiasts should proceed with caution.
It is an open secret in the crypto world that sooner or later, there could be a synergy between two of the hottest areas of the investment world. For investors and crypto enthusiasts looking to leverage the popularity of exchange-traded funds (ETFs) – an ETF that tracks bitcoin is the perfect avenue for this type of connection. Unfortunately, there are problems associated with bitcoin ETFs.
The primary reason is that Bitcoin, the largest crypto in the world by market capitalization, remains unregulated. Thus, the ever-busy buying and selling of cryptos remain unstoppable; this has only increased following the first futures-based Bitcoin ETFs launch.
BITO is the first U.S. bitcoin-linked ETF launched in October 2021. Unfortunately, the SEC hasn’t given approval for Bitcoin ETFs. Despite BITO not directly investing in Bitcoin. It was reported that in July, the SEC had over 13 applications waiting for regulatory blessings. In fact, the SEC has yet to officially approve BITO but has not in any way stood in the fund’s way.
BITO and other new Bitcoin futures ETF is proof that the SEC might be finally embracing the concept of U.S.-listed ETFs holding Bitcoin futures. Although at this moment, holding physical cryptos is impossible.
“This is a milestone achievement for the ETF industry,” says Todd Rosenbluth, Head of ETF & Mutual Fund Research for independent investment analysis outfit CFRA.
An ETF is an investment vehicle traded on stock exchanges. An ETF holds assets such as stocks, commodities, or bonds and trades like a stock. However, unlike mutual funds, an ETF does not hold the actual assets; it buys and sells them on the stock exchange at the current market price.
An ETF is a simple alternative to buying and selling individual assets such as bonds, commodities, and even real estate for investors who focus on losses and gains. And because traditional ETFs encompass plenty of assets with one thing in common – sustainability, they allow investors to diversify their holdings easily.
One potential drawback of an ETF is low volatility. However, volatility might actually be a good thing if you plan to hold long-term. This is because stable assets tend to rise as there is a corresponding increase in the market, which will be at a slow and steady pace.
On the other hand, for short-term trades, low volatile assets are not exciting. Investors will likely not be able to turn over moving assets quickly for money. Low volatility means that your equity will not shoot up 20% one day, but it won’t also crash by 20%, either. This makes the concept of Bitcoin ETFs even more appealing. Depending on your goals, the volatility of cryptocurrency may help your strategic outlook.
The problem, Bitcoin is a cryptocurrency and not a traditional sector, so how does an ETF come in? Jonathan Manzi, the CEO of Beyond Protocol, says, “Proceed with Caution.”
“Many traditional investors have yet to buy bitcoin; ETF taps into this demographic, allowing those with accounts at large brokerage firms to continue to manage all of their assets under one roof, while still gaining exposure to bitcoin,” explained Manzi, adding that the SEC-regulated fund can also be seen as safer than bitcoin for self-custody.
“Anyone who’s followed bitcoin — and crypto more broadly — for any length of time knows first-hand how much of a rollercoaster its path from obscure digital money to world-changing technology has been. And while detractors will point to volatility, the fact remains that bitcoin has outperformed every other major legacy asset in existence since 2009,” Jonathan Manzi concluded.
“The last time we saw something like this as a society was the emergence and eventual global dominance of the internet itself. And while there are many other cryptocurrencies with wonderful and innovative use-cases, bitcoin has continued to thrive, driven by the purity and simplicity it was designed with. Its inherent traits made it uniquely well-suited as the people’s choice for monetary freedom — a hedge against tyranny for the masses, built with immutable code.”
He advised investors to “proceed with caution” and “monitor the early-stage performance of these new ETFs, and limit your BTC investments to spot holdings for the time being.”
Jonathan Manzi is an American entrepreneur and the Chief Executive Officer and co-founder of Beyond Protocol, a Silicon Valley-based distributed ledger technology venture.
Manzi is the youngest person in history to attain a net worth exceeding $1 million via industry, doing so at the tender age of 16. And has since been at the forefront of charting a new frontier for adopting blockchain technology – providing a roadmap for how we can go from theory to practical applications. So, when he says, “Proceed with Caution,” we all should sit down and take note.