What is an exchange-traded fund (ETF)?

An ETF is a security type that holds diversified underlying investments, including commodities, stocks or bonds. The ETF might resemble a mutual fund because it is pooled and managed by its issuer. The mutual fund is currently managed by State Street and carries $328 billion in assets under management.More exotic structures are also available, like the ProShares UltraShort Bloomberg Crude Oil (SCO). This fund uses derivatives and aims to offer two times the daily short leverage on oil prices, meaning investors are effectively betting on a downturn in oil prices.Buying an ETF gives the investor direct ownership of its contents, creating different taxation events versus holding futures contracts and leveraged positions.

Trust funds, like GBTC do not offer redemption or conversion right.Investment trust funds sit outside the SEC’s authority and are actually regulated by the U.S. Office of the Comptroller of the Currency.

Grayscale's GBTC is the absolute leader in the cryptocurrency market, even though it has been structured as a company — at least in regulatory form. The investment trust is considered a closed-end fund, meaning the number of available shares are limited.

Consequently, GBTC shares are not freely created, nor do they offer a redemption program. This inefficiency creates significant price discrepancies versus the fund’s underlying Bitcoin holdings. In contrast, an ETF allows the market maker to create and redeem shares, ensuring the premium or discount is at most times minimal.

For instance, Purpose Bitcoin ETF (BTCC.U) held a $3.59 net asset value per share on Oct. 13, and the shares closed at $3.60 on Toronto exchange. Similarly, U.S. derivatives ProShares Bitcoin Strategy ETF (BITO) underlying price was $11.94 on Oct. 13, while its shares traded at $11.95.Today 16th of October 2022, Bitcoin’s (BTC tickers down $19,147 ) price took a tumble as a hotter-than-expected consumer price index (CPI) report showed high inflation remains a persistent challenge despite a wave of interest rate hikes from the United States Federal Reserve. Interestingly, the market’s negative reaction to a high CPI print seemed priced in by investors, and BTC’s and Ether’s (ETH tickers down $1,286 ) prices reclaimed all of their intraday losses to close the day in the black.

A quick look at Bitcoin’s market structure shows that even with the post-CPI print drop, the price continues to trade in the same price range it has been in for the past 122 days. Adding to this dynamic, Cointelegraph market analyst Ray Salmond reported on a unique situation where Bitcoin’s futures open interest is at a record high, while its volatility is also near record lows.These factors, along with other indicators, have historically preceded explosive price movements, but history will also show that predicting the direction of these moves is nearly impossible. So, aside from multiple metrics hinting that a decisive price move is brewing, Bitcoin is still doing more of the same thing it’s done for the past 4.5 months. With that being the case, it is perhaps time to start looking elsewhere for emerging trends and possible opportunities.

ETH’s price has lost its luster in the now post-Merge era, and the asset now reflects the bearish trend that dominates the rest of the market. Since the Merge, ETH’s price is down 30% from its $2,000 high, and it’s likely that a good deal of the speculative capital that backed the bullish Merge narrative is now in stablecoins looking for the next investment opportunity.

Aside from ETH being an asymmetrical performer in the last four months, Cosmos (ATOM tickers down $11.65) also defied the market downtrend by posting a monster rally from $5.40 to $16.85. As covered thoroughly by Cointelegraph, oversold conditions, along with the hype of Cosmos 2.0, backed the bullish price action seen in the altcoin, but this chart continues to capture my imagination.

ATOM emissions schedule (old vs. new). Source: Cosmos Hub According to the revised Cosmos white paper, the current supply of ATOM will dynamically adjust based on the supply and demand of its staking. As shown in the chart above, when Cosmos 2.0 “kicks in” for the first 10 months, issuance of new ATOM tokens is high, but after the 36th month, the asset becomes deflationary.

While new trends across various altcoins may emerge, it’s important to remember the wider context in which crypto assets exist. Global economies are on the rocks, and persistently high inflation remains an issue in the United States and many other countries. Bond prices are whipsawing, and a looming debt crisis makes its presence known on a daily basis. Risk-on assets like cryptocurrencies are incredibly volatile, and even the strongest price trends in crypto (whether backed by fundamentals or not) are subject to the whimsy of macro factors such as equities markets, geopolitics and other market events that impact investors’ sentiment.

Keeping this in mind, Bitcoin remains the largest asset by market capitalization within the crypto sector, and any sharp moves from BTC’s price are bound to support or suppress the micro trends that might be gaining traction in the market. There is still the possibility of a sharp downside in Bitcoin’s price, so traders are encouraged to calculate investment size according to their own appetite for risk, and while multiple metrics might support opening long positions in various crypto assets, it still seems too early to fully ape in..

U.S. investors have been waiting for a Bitcoin exchange-traded fund (ETF) approval since May 2014 when the Winklevoss Bitcoin Trust filed an amendment request at the Securities and Exchange (SEC).

Over the years, the SEC has rejected every applicant and the latest denial was issued to WisdomTree’s application for a spot Bitcoin ETF on Oct. 11. The SEC concluded that the offer did not have the ability “to obtain information necessary to detect, investigate, and deter fraud and market manipulation, as well as violations of exchange rules and applicable federal securities laws and rules.”

Bitcoin investment trust vehicles have existed since 2013, but they have been restricted to accredited investors. Launching a spot-based BTC ETF would open the market to retail investors and a broader array of mutual funds in the industry.

At the moment, U.S. regulators are reluctant to release what many believe would be a more fair and transparent product for Bitcoin. A conflicting reality is, while BTC spot ETFs continue to be rejected, the exact same product has long been available for bonds, global currencies, gold, Chinese equities, real estate, oil and silver.

The Grayscale Bitcoin Trust Fund (GBTC), a U$ 12.3 billion investment fund, is currently trading at a record-high 36.7% discount versus its Bitcoin holdings, but this might not be a buy the dip-type of discount. The gap started after the Toronto Stock Exchange launched the Purpose Bitcoin ETF in February 2021, which is a spot investment product.