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Demystifying bitcoin: a closer look at cryptocurrency ETFs

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Demystifying bitcoin: a closer look at cryptocurrency ETFs

Let’s peel back some of the mystery around the recent news propelling bitcoin into the spotlight – the new crypto exchange-traded funds (ETFs).

Cryptocurrency is digital money secured by a specific type of public ledger called blockchain. Without a governing body like a government, a public digital ledger transparently records peer-to-peer transactions. Bitcoin, launched in 2009, became the first widely adopted cryptocurrency. Because the number of coins is limited, bitcoin has become a tempting speculative investment.

A historic milestone: the approval of bitcoin ETFs by the SEC

On January 10th 2024, the U.S. Securities and Exchange Commission (SEC) marked a significant milestone in the cryptocurrency world with the approval of 11 spot bitcoin exchange traded funds (ETFs). This includes offerings from fund titans BlackRock and Fidelity. This move is set to potentially transform the landscape of cryptocurrency investing and open new opportunities for traders.

To understand the impact of this development, it is essential to grasp what spot ETFs are. A spot ETF is a type of fund that directly tracks the current, or ‘spot’, price of an asset and in this case, bitcoin (BTC). Unlike futures-based ETFs, which are tied to contracts betting on the future price of an asset, spot ETFs are backed by the actual price of the asset itself.

Boosting confidence in Bitcoin investments

This means that when you invest in a spot bitcoin ETF, the fund purchases actual bitcoin, and the value of your investment fluctuates with the real-time price of bitcoin in the market. These bitcoins are held by a custodian. Coinbase is the custodian for eight of the 11 spot bitcoin ETFs.

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The introduction of spot bitcoin ETFs is a game-changer because it provides a bridge between the traditional financial world and the burgeoning crypto market. For traders, this means easier access to bitcoin investments without the complexities and security concerns of managing a digital wallet or trading on a cryptocurrency exchange.

Liquidity, price stability and broader adoption

One of the most significant advantages of these ETFs is the potential for increased liquidity and price stability. As more institutional and retail investors gain exposure to bitcoin through these funds, trading volumes are expected to rise. This could lead to a more stabilised market with less price volatility, which is beneficial for traders who seek to capitalise on incremental price movements.

Moreover, spot bitcoin ETFs could also lead to broader adoption and acceptance of bitcoin as a legitimate asset class. With the SEC’s stamp of approval, investor confidence in bitcoin could grow, potentially leading to increased demand and, consequently, higher prices.

This parallels the journey of gold ETFs, which increased gold demand substantially and reduced volatility long term.

Bitcoin ETFs vs. futures contracts

Bitcoin ETFs make investing in bitcoin much more accessible to casual traders and retail investors. While futures contracts based on the price of bitcoin require oversight of settlement dates and delivery complexities, an ETF trades like a stock. It simply tracks an underlying index price — in this case, bitcoin spot price.

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The bitcoin ETF offers simple exposure tied to bitcoin’s price swings without needing to directly buy crypto from an exchange or wallet and take on the hassles of storage and security. You can buy and sell the ETF seamlessly like stocks from a standard brokerage account.

The ETF format opens the door to mainstream investment funds, retirement accounts like 401ks, and amateur stock dabblers — not just specialised futures traders. This instantly widens the pool of potential bitcoin investors dramatically.

The ETF coincides with another important moment for bitcoin prices: halving day.

Bitcoin halving day explained

Bitcoin mining is how new coins are created and verified transactions are added to the blockchain ledger. Miners compete to solve complex maths puzzles and earn rewards for each block added. Originally, successful bitcoin miners were rewarded 50 BTC per block, an incentive for mining activity. However, bitcoin has a hard cap of 21 million total coins that can exist.

To ensure controlled supply until the cap is reached, mining rewards decrease by 50% every 210,000 blocks mined. This pre-set halving of mining rewards happens approximately every four years, with the next halving day estimated to be in April 2024.

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When halving days reduce the supply of new bitcoins flowing in, simple economics kicks in. All else being equal, when supply drops but demand keeps growing, prices tend to rise. The anticipation of this can spur speculative investing leading up to the halving day.

Impact of halving day on supply and prices

Even without the ETF news, bitcoin’s next ‘halving day’ in April 2024 suggests this built-in increasing scarcity could drive prices up in the coming years.

Of course, cryptocurrencies still come with plenty of risk and uncertainty. But the possibility of more investors and financial giants embracing bitcoin and its derivatives indicates prices could continue climbing. For intrepid investors, crypto ETFs offer a simpler way to stake your claim!

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Strategy Is No Longer Just Going to “Inoculate the Market,” Selling Crypto May Be Much More Common. Here’s What That Could Mean for the Stock | The Motley Fool

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Strategy Is No Longer Just Going to “Inoculate the Market,” Selling Crypto May Be Much More Common. Here’s What That Could Mean for the Stock | The Motley Fool

When Strategy (MSTR 0.69%) sold a modest amount of Bitcoin earlier this year, it was a noteworthy development given that the company’s business has centered around buying up as much of the cryptocurrency as it can, and vowing to never sell. And it often boasts of being the largest corporate holder of the digital currency.

The company brushed off the sale of 32 Bitcoins, with management saying it simply wanted to “inoculate the market.” Well, now it appears that Strategy is doing much more than just that, and there could be more significant cryptocurrency sales in the future.

Image source: Getty Images.

Strategy unveils a Bitcoin monetization program

On June 29, Strategy released a framework going forward that it says will “enhance liquidity, preserve long-term Bitcoin exposure, and support long-term value creation for shareholders.” Among the notable components is its Bitcoin monetization program.

Within that program, the company says it may sell some of its cryptocurrency holdings for multiple reasons, including to fund a USD reserve, fund dividends or interest expense, or to fund repurchases of digital credit securities or common stock.

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While the company says it remains committed to Bitcoin for the long term and it’s the company’s “primary treasury reserve asset,” it’s a significant change of course for Strategy, which was previously heavily against ever selling the digital asset.

Strategy Stock Quote

Today’s Change

(-0.69%) $-0.69

Current Price

$100.08

The stock is as risky and volatile as ever

Whether or not Strategy buys or sells Bitcoin doesn’t change the fact that this is a highly risky and speculative stock to own. While crypto fans may be disappointed in the company’s change in strategy, selling Bitcoin will likely not be enough to make the business any better or worse as an investment.

In just the past 12 months, the stock has plummeted a whopping 75% as volatility in digital assets has drastically weighed on its earnings, with the company incurring $12.8 billion in losses over the trailing 12 months, on revenue of $490 million.

That’s not likely to change significantly, even if Strategy offloads some of its crypto holdings, because with such a large exposure to Bitcoin, how the cryptocurrency performs will inevitably impact the company’s bottom line in a big way. This year, the leading cryptocurrency is down 28% as investor excitement around it has largely cooled off, which has proven disastrous for Strategy’s stock as well. And at this stage, there’s little reason to anticipate a recovery anytime soon.

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An Easy-to-Miss Radio Traffic Jam Is Behind Many Home WiFi Slowdowns

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An Easy-to-Miss Radio Traffic Jam Is Behind Many Home WiFi Slowdowns

Key Takeaways

Your WiFi can feel rock-solid at midnight and oddly sluggish by breakfast, even when you have not touched a single setting. The culprit is often outside your walls: a crowded slice of public radio spectrum where your router has to negotiate space with every nearby network, plus a grab bag of household gadgets that leak interference. Add peak-hours demand and the signal-blocking quirks of building materials and weather, and “slow internet” starts to look less like a billing issue and more like an invisible traffic problem you are forced to share.

When WiFi slows down without warning

One day your home WiFi feels snappy, the next it drags, even though your router hasn’t moved and your internet plan hasn’t changed. That swing is real, and it’s usually not your imagination or a “bad day” from your ISP. WiFi lives on shared airwaves, and those airwaves get crowded, noisy, and sometimes just plain finicky.

Think of your connection as a conversation in a busy room. Your laptop and router may be talking just fine, but the room itself can fill up fast with other chatter. What looks like a mystery slowdown is often the result of invisible competition and interference that changes hour by hour.

The battle of competing networks

Most homes still rely heavily on the 2.4 GHz and 5 GHz WiFi bands, which are unlicensed spectrum in the US. That “free for everyone” reality is convenient, but it also means your network shares space with your neighbors, their smart TVs, their work laptops, and every nearby router doing the same thing.

Congestion has a rhythm. During common work-from-home and school-from-home windows, especially 8-10 AM, and again in the evening 6-10 PM, more devices are streaming, video calling, syncing, and downloading updates. Even if you pay for fast broadband, your WiFi link can become the bottleneck when the local radio environment gets packed.

Interference inside your home

Your own house can sabotage you. A microwave is the classic culprit because it can leak noise near 2.4 GHz, exactly where many WiFi networks still operate. Older cordless phones, some baby monitors, and even dense clusters of Bluetooth gadgets can add more clutter, especially in smaller apartments where everything sits close together.

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Then there’s physics. Concrete, metal, and even water (think aquariums or thick pipes in walls) absorb and scatter radio signals. A router shoved behind a TV, tucked into a cabinet, or stuck in a far corner forces your devices to “hear” through more obstacles, lowering speeds and making dropouts more likely.

Weather, channels, and what you can do tonight

Environmental changes can matter too. Higher humidity and rain can slightly increase signal loss, and shifting temperatures can change how radio waves propagate around a neighborhood. You might never notice on its own, but paired with congestion it can tip a marginal connection into a frustrating one.

The 2.4 GHz band is also channel-limited. In the US there are 11 channels, but only 1, 6, and 11 don’t overlap. Many routers default to “auto channel,” so nearby networks can hop around trying to escape interference, sometimes creating instability. Practical fixes: prefer 5 GHz (or 6 GHz if you have WiFi 6E/7 gear), place the router centrally and higher up, and use a WiFi analyzer app to pick a less crowded channel instead of leaving it on auto.

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U.K.’s sanctions on cryptocurrency exchanges signal new focus on illicit digital financing – Compliance Week

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U.K.’s sanctions on cryptocurrency exchanges signal new focus on illicit digital financing – Compliance Week

Cryptocurrency exchanges believed to be financing Russia’s war in Ukraine have been sanctioned by the U.K. government in the first attempt to prevent evasion via “dark networks.” The move indicates a new focus on digital sanctions evasion, and compliance teams should expect these rules to develop further, potentially in the EU and other jurisdictions.


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Ruth Prickett graduated from Cambridge University with a BA hons in History and has specialized in business and finance journalism for the past 20 years. She was editor of Financial Management, the magazine…
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