in 6 months he earns 85%. BlackRock is the driving force with the first ETF -

in 6 months he earns 85%.  BlackRock is the driving force with the first ETF -

Of Gabriel Petrucciani

The most famous cryptocurrency has managed to overcome the technical obstacle placed at 30 thousand dollars. The influence of BlackRock which manages over 10 trillion dollars

An 85% gain from the beginning of the year, which rises to 96% if you look at the upward movement from the lows of November 2022, to $15,603. It is the 2023 performance of bitcoin, which has practically doubled its value in six months. And in recent days, the most famous cryptocurrency has also managed to overcome the important technical obstacle set at 30,000 dollars, in the wake of the request for listing on the Stock Exchange of the first ETF (Exchange traded fund) with bitcoin as the underlying. A request made by BlackRock and which is now being examined by the Sec. On previous occasions, the American Consob has always opposed the launch of a spot ETF on cryptocurrencies due to lack of market transparency, fraud and manipulation risks and because it is always of unregulated instruments and therefore subject to poor supervision. But this time, at least judging by the recent trend in the price of bitcoins, the market seems to really believe in it, on the one hand due to the influence that a giant like BlackRock can exercise, which manages global assets of over 10 trillion dollars, and on the other hand because the American asset manager has actively worked to stem one of the main risks that worries the SEC, market manipulation. And the American asset management industry also believes it, with Invesco and WisdomTree who immediately followed BlackRock's example by submitting an application for the listing of their ETF on bitcoin.

What changes with ETFs

While waiting for "the world" to open its doors to the first exchange traded fund, asset managers have equipped themselves and, first in Europe and then also in America, have listed other cryptocurrency replicants on the Stock Exchange in the guise of Etn, Exchange Traded Notes, or debt securities which, through derivative instruments, are able to faithfully follow the performance of the underlying assets. With a substantial difference compared to ETFs, however: since it is a debt security, by purchasing an ETN the investor effectively becomes the holder of a credit towards the issuing company, which he will be able to collect when he decides to liquidate his position. But if in the meantime the issuer were to fail then the investor would lose the capital employed in the purchase of the Etn. In practice, therefore, investing in cryptocurrencies through an exchange traded note is subject to a double risk: that of the market and that of the issuer. With the ETF, on the other hand, the picture changes radically. The Exchange traded fund is to all intents and purposes a mutual fund and therefore its assets are segregated, i.e. separate from that of the issuer, and kept with a custodian bank. The invested capital, therefore, remains the property of the customer, who will be able to collect it even in the event of bankruptcy of the issuing company or of the custodian bank itself (the assets of the ETF are not included among the bankruptcy assets). Therefore, due to its characteristics, the ETF could bring even the most skeptical investors closer to the crypto world and for this very reason the market is looking very optimistically towards its possible listing.

Where can bitcoin arrive

The forecasts for bitcoin are extremely optimistic, especially considering that in 2024, approximately in April, there will be the fourth halving, i.e. the halving of the bitcoin reward (from 6.25 to 3.125) due to the so-called miners. The halving is an event built into the very concept of bitcoin, whereby every 210,000 blocks, roughly every four years, the reward given to miners decreases by 50 percent. The halving influences investor sentiment due to the balance between supply and demand. The maximum number of existing bitcoins is 21 million. This, coupled with the decrease in issuance due to reduced block premiums, creates an element of scarcity for the asset and, in theory, an increase in prices. In previous cycles, bitcoin has always risen both as the halving approaches and in the 18 months following it. This was the case in 2012, 2016 and 2020. And now the market is hoping that the same will happen in 2024 as well, with bitcoin possibly reaching new records above the $70,000 threshold (the previous all-time high was reached in November 2021 at $68,610).

How to invest today

For now, there are only two viable ways to invest in cryptocurrencies: buy digital currency directly through an exchange (exchange) or wallet, or follow an indirect approach through the purchase of an ETN listed on regulated markets. To invest through an Exchange or a wallet, you need to download an application on your smartphone and then register and be immediately operational. Among the best known exchanges are Coinbase, Bitpanda, Kraken and eToro. Among the Wallets, on the other hand, there are two all-Italian realities, which also offer the custody service: Conio and ChackSig. The difference between the two options is that in the case of Exchanges, one does not physically own the cryptocurrency, which remains in the possession of the exchange, and therefore one is forced to "bear" also a counterparty risk. So if the exchange fails, the cryptocurrencies are lost.

The road of the Etns

The first ETNs with underlying cryptocurrencies were listed in 2015 on the Stockholm Stock Exchange by Xbt Provider. In 2018, then, the then Amun Ag (today 21Shares) brought an ETP that replicates a basket of digital currencies to the Zurich Stock Exchange and later, again in Zurich, WisdomTree also made its debut, with an ETP entirely on bitcoins. And then VanEck also arrived, who on Xetra (in Germany) launched two Etn, one on bitcoin and one on Ethereum. The offer then expanded over time, covering various cryptocurrencies and various financial markets. After Sweden, Switzerland, Germany and the Netherlands, France has also opened its doors to replicants with underlying cryptocurrencies. Piazza Affari, for now, is still at the window, but many products, as "passports", can also be purchased in Italy. Accessible Etn are only those that have been registered in Italy and which, at least for now, mainly cover the two cryptocurrencies with the highest capitalization: bitcoin and Ethereum.

June 28, 2023 (change June 28, 2023 | 09:23 am)

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