There has been a big push for investors to be able to buy Bitcoin without actually having to buy the digital currency. Products — such as futures — have entered the market and upon their arrival in early December last year, Bitcoin rallied toward $20,000. However, the biggest prize on offer for investors — mainly of the institutionalised variety, who are still skeptical about owning Bitcoin — is an exchange-traded fund (ETF). There has been a push, through the SEC, to try and get a Bitcoin ETF in place for some time now, starting with the Winklevoss twins’ first attempt in March 2017. Meanwhile, a product, called Bitcoin Tracker One, which has been trading on the Nasdaq Stockholm exchange since 2015, offered what is known as an exchange-traded note (ETN), and this week, it was suddenly quoted in dollars. The ETN is considered a ‘soft’ alternative to the Bitcoin ETF that many are chasing after, but even with this move to make it accessible to an audience in the United States, separate from their country’s regulations and the U. S. Securities and Exchange Commission (SEC), there was not much movement in the market. It seems that, even with the option to buy an ETN, U. S. investors — and the Wall Street money they can bring to Bitcoin — are not biting. There was no excitement in the market — a market notorious for taking news as a catalyst for up-and-down movements. This could have to do with the fact that this ETN is not an ETF, but it could also be the heavy bearish sentiment. Why an ETN or an ETF? These products, which allow to invest in Bitcoin with relative safety as investors do not own the actual commodity, have been highly praised by many, but they also have their detractors. An ETF is a marketable security that tracks either an index of funds, a commodity or a basket of assets — and in this case, the asset is Bitcoin. So, what would happen, should the SEC allow a Bitcoin ETF, is that the fund would purchase an underlying amount of actual Bitcoin and distribute those funds into shares, which are then distributed to shareholders. Thus, they make it far more comfortable and familiar for the institutional investor who has been using ETFs for other assets and commodities, and this might be why many think it could be a big entry point for a lot of money into the Bitcoin space. An ETN, on the other hand — seen as a ‘soft’ ETF — is a debt instrument that is backed by its issuers, such as a bank, rather than a pool of assets. Often, they focus on esoteric strategies that don’t easily fit into a fund. The interesting debate about whether these types of products are needed in the cryptocurrency ecosystem is often exaggerated by the broad and all-encompassing nature of the space. There are traders, blockchain engineers, get-rich-quick types, crypto-anarchists and cryptocurrency purists who are all operating around Bitcoin and other cryptocurrencies and all have their own beliefs. Andreas Antonopoulos is quite against the idea of a Bitcoin ETF, stating: “I am going to burst your bubble […] I know a lot of people want to see an ETF happen, because of ‘to the moon’ and Lambos and all of that. […] I still think it is going to happen, I just think it is a terrible idea. I am against ETFs. I think a Bitcoin ETF is going to be damaging to the ecosystem.” Antonopoulos’ criticism is not that an ETF would cause prices to drop or investments to stop. In fact, he goes on to state: “Everybody is so excited about ETFs, because what we have seen in other markets is [that] when an ETF becomes available — as we saw in gold — the price really increases dramatically, as suddenly that commodity becomes available to a lot more investors. And these investors pile on.” While many see ETFs as the kickstart that the crypto markets need right now from a price point of view, Antonopoulos argues that the real dangers of the introduction of ETFs lie somewhere else: “But, the other side of it is that there [are] always these claims that these commodities markets are heavily manipulated. And opening up these ETFs only increases the ability of institutionalized investors to manipulate the prices of commodities — not just on the markets where they are traded as an ETF, but also more broadly.” Why this ETN is not a market-mover Taking into consideration assertions that ETFs could skyrocket the price of a commodity as institutionalized investors pile into the market, it could seem strange that the announcement of this option — i.e., an ETN that is able to be traded with dollars — brought very little movement in the market. One could assume that a smaller, ‘safer’ option to an ETF would be snapped up and popular for the institutionalized market, but perhaps these investors are holding out — or are still too bearish. Jeff Kilburg, the founder and CEO of KKM Financial, explains that Bitcoin and its up-and-down volatility is going to continue until a decision is reached on ETFs and that even the ETN won’t have much say in it all. “I think there will be continued volatility, but it really is contingent on this exchange-traded fund. […] These long-term, bullish buyers have to understand that people are going to have access globally to an exchange-traded product and, if that comes in — and we do get some absolute determination that it is coming short-term […] this fall — then I think the rally continues.” Kilburg is clearly optimistic about the power an ETF would have on the market, and so is Bart Smith, the head of the digital assets division of the global investment market giant Susquehanna International Group, who says that the ETN has gained some traction, but is nowhere near as explosive as the possibility of an ETF. “What you are seeing now is that we are right back to where we were. A month ago, we were talking about breaking out, but this is a bear market rally. Until we break to new highs, people are not buying.” Smith follows in Kilburn’s reasoning that this ETN is not as big as a potential ETF would be: “This is not as big as [it would be] if it was SEC regulated. An ETF in the U. S. — that was SEC registered — would have a much bigger effect. But, if there is something that is driving new money into the price of Bitcoin, then you would imagine it would raise it up.” The ETF Holy Grail With an ETN now available to U. S. investors — as well as futures trading possible through a number of institutionalized trading houses — Bitcoin is still not reaching new heights. There is a lot of hype and excitement about a possible ETF, as the SEC continues to mull over a number of applications for various Bitcoin ETFs. While no one can predict the future of the price of Bitcoin and how it will react to the news of an ETF, the sentiment is strong from most that it will make a big difference. The feeling is that there is a mountain of money waiting to enter the Bitcoin space that is being held back by nontraditional methods of investing. If this barrier is broken down, is it possible Bitcoin will surpass $20,000 again?