U.S. SEC approves the first Bitcoin-related ETF listed company investing in Bitcoin has already lost money

Bitcoin ETFs have always attracted the attention of the crypto market. On October 5th, the U.S. Securities and Exchange Commission (SEC) approved the ETF application submitted by Volt Equity, which is also the first Bitcoin-related ETF product approved by the United States. The reporter learned that the ETF will not directly hold any cryptocurrency, but will consist of shares of about 30 companies, including MicroStrategy , Tesla, Square, Coinbase and PayPal.

In fact, the US SEC is very cautious about Bitcoin ETFs. So far, no ETF related to Bitcoin spot trading has been approved. On September 29, the SEC announced that it would postpone its decision on four Bitcoin ETFs for 45 days and postpone the timetables of Global X Bitcoin Trust, Valkyrie XBTO Bitcoin Futures Fund, WisdomTree Bitcoin Trust and Kryptoin Bitcoin ETF to November. 21st, December 8th, December 11th and December 24th.

“ETF will provide capital to invest in a package of Bitcoin-related companies, and will provide formal investment institutions with a secure channel for large capital to buy Bitcoin. But in the short term, the SEC will only consider Bitcoin for fraud and manipulation. The probability of ETF passing the review is still low.” Chengluo Capital partner Xu Mingsui said in an interview with a reporter from China Times on October 11.

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During the November holiday just past, the price of Bitcoin rose significantly. From September 30 to October 12, the current round of increase was close to 40%. As of press time, the latest price of Bitcoin is 57,560.50 US dollars, an increase of 0.13% within 24 hours. Ned Davis Research, a global market analysis service provider, pointed out in a recent analysis report that this round of rise is due to the upcoming launch of the Bitcoin futures ETF, driven by the Bitcoin “green light” signal released by the Federal Reserve and the SEC.

Listed companies lose money from investing in Bitcoin

The reporter learned that about 80% of the Volt Equity Fund’s net assets will be invested in encrypted stocks, and the remaining 20% ​​will be invested in more traditional stocks to offset the risk of the fund’s key investment portfolio.

Volt founder Tad Park said in an interview with foreign media that the fund will be listed on the New York Stock Exchange in the next few weeks under the trading code BTC R. In addition to Tesla, Square, Coinbase and PayPal, he also stated that Volt decided to include Bitcoin mining companies such as Twitter and Marathon. “The volatility of the Bitcoin Revolution Fund will be lower than that of pure cryptocurrencies, because the plunge in the price of Bitcoin will not have a significant impact on the stocks of companies such as Tesla or PayPal,” Park said.

The reporter found through combing that with the changes in the global regulatory wind in the first half of this year, Bitcoin has experienced a cumulative price correction of more than 50%, and most of the listed companies’ investments in Bitcoin have suffered losses.

According to MicroStrategy’s second-quarter financial report, as of June 30, 2021, MicroStrategy holds approximately 105,000 BTC, with a book value of US$2.051 billion, and an impairment loss of US$689.6 million since the acquisition. Among them, Bitcoin suffered an impairment loss of USD 425 million in the second quarter.

Wang Juan, secretary-general of the Digital Economy Committee of the Beijing Computer Society, believes that the company made a lot of money in the early stage of Bitcoin’s skyrocketing market. With the fluctuation of the market, it is normal to lose money, because its main asset type is In the field of encrypted digital currency, in the turbulent situation of the entire market, encrypted currency is the main investment variety, and its investment diversification cannot completely hedge risks.

In addition to MicroStrategy, Tesla reported that its Bitcoin asset impairment in the second quarter was $23 million. The Square report shows that in the second quarter of 2021, the company’s own BTC investment suffered a $45 million impairment loss. The announcement issued by Meitu Technology, a Hong Kong-listed company, confirmed that the fair value of bitcoins invested by the company had decreased by US$17.3 million as of June 30, 2021. Meitu will be recognized as an impairment loss in its interim results.

In this regard, Liu Changyong, director of the Blockchain Economic Research Center of Chongqing Technology and Business University, told this reporter that large companies headed by Tesla, investment funds headed by Grayscale, and countries headed by El Salvador have driven more and more Many companies, funds and countries use Bitcoin as a new investment or reserve asset. But at this stage, Bitcoin is still a highly volatile asset, and listed companies investing in Bitcoin should carefully assess the risks. Listed companies that enter the market in the latter part of the bull market will face greater risks. It is not ruled out that some listed companies with improper risk control will get into trouble due to Bitcoin investment.

Bitcoin ETF never accepted by the SEC

According to preliminary statistics from reporters, since the submission of the first BTC ETF application in the United States in 2013, nearly 20 asset management agencies have submitted Bitcoin ETF applications to the SEC, but so far, all applications have been rejected or postponed.

On September 29, the SEC announced that it would postpone its decision on four Bitcoin ETFs for 45 days. On September 8, the SEC announced that it would extend its decision to approve the VanEck Bitcoin Trust for 60 days to November 14. The passage of the Volt Equity Fund has caused widespread speculation in the industry that the SEC is about to approve its first “pure” Bitcoin ETF. Bloomberg analyst Eric Balchunas said that as regulators continue to consider spot Bitcoin ETFs, Bitcoin futures ETFs may be approved in the next few weeks.

In fact, there are tradable Bitcoin ETFs in Canada, Brazil and Dubai. In February of this year, the Purpose Bitcoin ETF listed by Purpose Investments in Toronto became the first Bitcoin ETF in North America. On June 23, the Brazilian Stock Exchange (B3) listed the first Bitcoin ETF in Latin America launched by QR Capital. In addition, countries such as Switzerland, Sweden, and Germany have approved exchange-traded products (ETP) for virtual currencies.

In terms of the realization form of Bitcoin ETF, institutions are no longer limited to the traditional ETF form around Bitcoin spot trading. The reporter learned that VanEck’s latest Bitcoin Strategy Fund (Bitcoin Strategy Fund) plans to invest in Bitcoin futures contracts and collective investment vehicles and exchange-traded products (ETP) involving Bitcoin, instead of directly investing in Bitcoin and other Digital assets.

On September 30, SEC Chairman Gary Gensler stated that he supports BTC futures ETF funds instead of BTC spot ETF funds. According to statistics, as of the beginning of October, a total of 9 Bitcoin futures ETFs are waiting for the SEC to release.

Regarding this, Wang Juan said that the reason for the SEC’s previous rejection of Bitcoin ETFs was very clear and simple, because its price and trading mechanism were opaque. As a trading index fund, the price basis is not transparent. The risk of being manipulated.

Wang Juan further stated that the most direct effect of Bitcoin spot-related ETFs is to enable more people to obtain ownership of Bitcoin assets, because if Bitcoin is directly obtained, the difficulty will become more and more difficult from the perspective of mining. Large, from the perspective of direct transactions, it is also very inconvenient due to the different policies of various countries. Through ETF products, investors do not need to have encrypted digital currencies, but to obtain direct coins on various platforms that are not officially recognized, and refer to gold and other commodities, which greatly enlarges the trading market and reduces investors’ technical and Policy threshold.

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