Fidelity Launches Bitcoin ETF
Posted on 03/24/2021
The Wise Origin Bitcoin Trust is an exchange-traded fund that issues common shares of beneficial interest. The Trust’s investment objective is to seek to track the performance of bitcoin, as measured by the performance of the Fidelity Bitcoin Index PR, adjusted for the Trust’s expenses and other liabilities. The Index is constructed using bitcoin price feeds from eligible bitcoin spot markets and a volume-weighted median price (“VWMP”) methodology, calculated every 15 seconds based on VWMP spot market data over rolling 5-minute increments. The Index is designed to reflect the performance of bitcoin in U.S. dollars. In seeking to achieve its investment objective, the Trust will hold bitcoin. The Trust is sponsored by FD Funds Management LLC , a wholly-owned subsidiary of FMR LLC. The Trust provides direct exposure to bitcoin, and the Shares of the Trust are valued on a daily basis using the same methodology used to calculate the Index. The Trust provides investors with the opportunity to access the market for bitcoin through a traditional brokerage account without the potential barriers to entry or risks involved with holding or transferring bitcoin directly, acquiring it from a bitcoin spot market, or mining it. The Trust will custody its bitcoin at an affiliate of the sponsor, Fidelity Digital Assets Services, LLC, a New York state limited liability trust company that provides custody and trade execution services for digital assets. The Trust will not invest in derivatives.
Bitcoin Risk
Several factors may affect the price of bitcoin, including, but not limited to: supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory measures (if any) that restrict the trading of bitcoin or the use of bitcoin as a form of payment. The issuance of bitcoin is determined by a computer code, not by a central bank, and prices can be extremely volatile. For instance, during the period from December 17, 2017 to December 14, 2018, bitcoin experienced a decline of roughly 84%. There is no assurance that bitcoin will maintain its long-term value in terms of purchasing power in the future, or that acceptance of bitcoin payments by mainstream retail merchants and commercial businesses will continue to grow.
Bitcoin ETFs are providing a level of competition for the Grayscale Bitcoin Trust (GBTC), which is a way for investors to get exposure to Bitcoin in the form of shares. GBTC now had a negative premium for an entire month. This means the price of each share remains below the corresponding amount of Bitcoin it represents. Grayscale has a tremendous incentive to get the liquid shares back to net asset value or a premium. GBTC was formed because the SEC has not yet granted any company permission to create a Bitcoin ETF.
8 Bitcoin ETF applications in the United States
Fidelity
Goldman Sachs
SkyBridge
Morgan Stanley/NYDIG
VanEck
Valkyrie
WisdomTree
Bitwise
Keywords: Fidelity Management & Research.
