Some of the biggest news that has come out about cryptocurrency this year just dropped and the S&P just announced that they will be launching cryptocurrency indexes in 2021. All of this is extremely promising and exciting, but I am also seeing a lot of confusion and misunderstanding.
Here at the Cryptocosm and the Finfluential , I’ll be breaking down what this news means, what the actual benefit is, and how the smart money should be playing this.
Bitcoin & Cryptocurrencies Takes Over Wall Street
The big news is that cryptocurrency indexes are coming to the stock market, and to understand what that really means, lets first ask a couple of questions:
What is an index?
What has been holding Bitcoin back?
Does this news open doors for a bitcoin or cryptocurrency ETF?
Does this pave way for mainstream adoption?
Let us start from the first question – what is an index? is this something you and I will be able to invest in?
For newbies out there an index is a method to track the performance of some group of assets in a standardized way- passive index investing has become a popular low-cost way to replicate the returns of popular indices such as S&P 500 or Dow Jones.
Anyways let us get back to the previous part, the first thing you need to know is that you can’t invest directly in an Index. Rather someone needs to create a fund to track the index. So far, the S.E.C has declined to approve any crypto funds.
This Is So HUGE!
The Bitcoin ETF is a great example of this, the one thing you need to know (hopefully if nothing else the one thing you take from this article) is that the S&P creating a cryptocurrency index is big news, because it gets us closer to the S.E.C approving cryptocurrency ETF’s down the road. Previous attempts to launch an ETF or buy no-name companies with proprietary data. The SEC was not a fan of this idea, but with a big name like the S&P behind the data, well, if a company wanted to create an ETF using that index and data, that would be most likely to see SEC approval. then, once we see cryptocurrency ETF’s created and approved, well many more people will easily access them for investment purposes in retirement accounts and other brokerage accounts.
That is something we should absolutely want more cryptocurrency investment vehicles: giving more access to more people in a more efficient manner. This helps us segue into the 2nd question about what is holding bitcoin and other cryptos back. now, as it relates to the news today. there has been this longstanding mischaracterization of bitcoin that it is volatile, that it is risky, that it is something you should fear, but the truth is that, actually over time, Bitcoin’s volatility has been going down in my opinion and its acceptance has become more mainstream in a world of runaway inflation via currencies and central bank policies pushing us closer and closer to “hunger games” economics.
I think the Bitcoin Core aspects has been extremely desirable and its principles have been liberating. what this news tells us to do is, just how square and PayPal have opened the door to institutional on-ramps, getting more people to utilize and transact and accept cryptocurrencies in the same regard, institutional access to investment vehicles helps open the doors to institutional acceptance on that end as well. Frankly, that is how the smart money is going to be playing this.
The tides of change are coming as the smart money have foreseen, the acceptance of cryptocurrencies increasing the need for is definitive, because as the world becomes more digitized and open to decentralization, this could not come at a better time, but I think what is going to be the lasting impression from today’s news is that investors are going to become more and more comfortable with the instrument.
I believe this is a great start as we enter the year 2021. Bitcoin and other Alt-coins have never been more relevant or needed than in this moment right now.
This Might Be The Catalyst That Will Push Bitcoin Above $20,000 And Beyond
Anyways, thank you dropping by at the Finfluential and the Cryptocosm, or if you are reading this article on LinkedIn, thanks for stopping by and appreciative that you have taken the time to learn more about Bitcoin and other amazing crypto’s or digital assets. But I want to hear from you and drop some comments below and share your opinion of the news mentioned above.
Where do you think we are going and how are you preparing for 2021?