‘An ETF(Exchange Traded Funds), like the name implies are funds traded on an exchange’ -I’m very sure this is what you've been getting on your search, trying to understand what an ETF is all about. Well, congratulations as your favorite crypto journalist is here to break it down in bits to the simplest form possible, so whichever category you may be, can still understand and grasp exactly what this phenomenon that's been all over the news lately is really all about.

Oh well, Happy New Year to you, I could have started with that I guess, but it's never too late you see. Welcome to 2024. Now, back to our discussion, in understanding what an ETF is, I'll like to employ the ‘LI5’ strategy, meaning -Like I’m 5. I'm sure you'd like it, let's get to it then.

Understanding An ETF LI5

Imagine an ETF (Exchange-Traded Fund) as a basket containing different currencies of the world(naira, dollar, yen, pounds, shillings, cedis etc). Now as an investor, you have some monies to invest, and would like to purchase a portion of this basket which can also be called a currency ETF. When you buy a portion of the basket, you indirectly own a little bit of those different currencies inside. It’s just like walking into a restaurant and buying a plate of soup, and you tell them one portion. You bought a plate of soup, but inside that soup are things and ingredients that was added inside to make that soup just to your taste, same way different assets were added inside that basket. The company that makes it possible for you to buy something like this is known as a Fund Management Company.

A Fund Management Company is an organisation that manages the investment of the basket of currencies, on behalf of individuals and organisations. Their aim is to make sure those currencies they chose to be inside that basket produces profits, which you’re then given a portion of these profits because you own a portion of the basket. As simple as that. This is all there is to an ETF and the companies that offers it. I'm sure it makes more sense to you now, now lets bring it home.

Who is BlackRock and Their Role in the Bitcoin ETF

BlackRock is the largest Asset Management Company in the World currently managing a total of $ 9.42 trillion in assets as of June 30, 2023. An American Multinational Investment Company headquartered in the city of New York with offices in over 29 countries, her clients span over 100 countries in the world.

With the Bitcoin Market Cap recording the biggest height of $1.28 trillion back on November 9th, 2021 at the peak of the last bull market, BlackRock along with other big asset management companies already applied to the Securities Exchange Commission (SEC) in order to have a Bitcoin ETF to offer to their clients as an investment option. Looking at this from the standpoint of an incoming Bull Market, this stands to imply that, if approved on the designated date which is January 8th - 10th of 2024, could affect the market cap of Bitcoin drastically and add to an even more exposed Bitcoin Bull Market, making it the biggest and most outstanding ever seen before in history. This might even mean, that the growth ratio of the Bitcoin price in the last bull markets could also take a new turn, what do I mean? If in the past, Bitcoin bull markets usually had a growth rate of 3-10x, this time could go well beyond that.

As this might stand to be some serious hopium(hope) to lean on, due to the last all-time high of Bitcoin, it still can't be completely rebuffed as we have some series of events lined up for 2024 that are potentially going to affect the Bitcoin price significantly;

-The Bitcoin bull market

-The ETF decisions

-The Bitcoin Halving

-The 2024 US elections

You can see 2024 is well-loaded and Of course, this isn't financial advice but we could very well be on our way to seeing a Bitcoin price of a million dollars come to the top of this bull market. Maybe or maybe not, one thing is sure, we're going beyond the height of the last bull market as previously seen in the Bitcoin Market cycles.

Now back to the present, I still have my reservations as regards the Bitcoin ETF approvals. Will the SEC come up with stories that touch the heart? Or will the ETFs be approved without any other hindrances we’ll see, but I have my unpopular opinion about the approval of the ETFs, let's analyze it in our next discussion on this topic.

As always, your favorite crypto journalist -Clever Abaribote. See you soon.

Sources : Photo credit

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