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CFDs are complex instruments. 70% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

'Bitcoin's ETF approval marks its maturity as an investment'

The 18% loss seen in the immediate aftermath of the approval of the ETF a few weeks ago was the market retracing back into the 200% gains seen in Bitcoin over the previous 14 months.

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But, Hector McNeil, founder and CEO of HANetf, says if the pattern is repeated from the first EFT in gold two decades ago, then this is the beginning of the maturity of Bitcoin into an investment that will form part of many portfolios.

He says the ‘wild west’ that was the trading environment of cryptocurrencies will increasingly be a thing of the past. Then, on from this point, is likely to come ETF approvals for other cryptos such as Ethereum.

(AI Video Summary)

The Bitcoin ETF

The Bitcoin ETF, a type of investment fund, was approved a few weeks ago. On its first day, the 10 new funds together brought in around $4.7 billion. However, the price of Bitcoin has since dropped by about 18%. Hector McNeill, who helped create the first gold ETF 20 years ago and is now the CEO of HANetf, discusses how these two types of ETFs are similar. He thinks ETFs are valuable because they allow people to invest in assets that are typically difficult to trade.

Additionally, ETFs offer protections and are regulated, unlike the crypto world. McNeil hopes that the approval of the Bitcoin ETF by the SEC will encourage regulators like the UK's Financial Conduct Authority (FCA) to be more open to cryptocurrencies.

One advantage of ETFs, according to McNeil, is that investors can have a regulated product and combine all their investments in one place. Currently, the FCA only allows professional investors to access Bitcoin through a special product called spot Bitcoin. However, retail investors have other options like proxies. McNeil hopes that the FCA will eventually see the value of regulated products in providing investor protection and the ability to trade cryptocurrencies.

Gold ETF

McNeil uses the example of the first gold ETF to explain how ETFs can make an asset more accessible. Before the gold ETF, people had to physically own gold, which was inconvenient for online businesses. The gold ETF allowed people to own gold on a shared and fractional basis, backed by good delivery bars.

In the same way, McNeil believes that the Bitcoin ETF will lead to a wider adoption of Bitcoin. This will make Bitcoin less speculative and more of a long-term investment and diversifier for portfolios. Although the price of Bitcoin will still have some ups and downs due to limited supply, McNeill predicts a steadier rise over time.


McNeill also suggests that Bitcoin is chosen by many people as a store of value and a hedge against the conventional financial system, just like gold. He believes that the technology behind Bitcoin makes it function well as a currency, and that criticisms of Bitcoin, such as money laundering, also apply to traditional currencies. As more people adopt Bitcoin, McNeil thinks central banks and governments will need to find ways to digitise their currencies.

In terms of accessing Bitcoin in the UK, McNeil mentions the KOIN ETF, which provides exposure to companies heavily influenced by the price of Bitcoin. He thinks this is a good option for retail investors and expects more ETFs for other cryptocurrencies like Ethereum in the future.

Overall, McNeill sees parallels between the gold ETF and the Bitcoin ETF, and believes that the wider adoption of Bitcoin will lead to a more stable and valuable asset class.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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