Great News for Bitcoin’s ETFs and More!

Hello, pack! 🐺

This is Howling Markets, the beacon of light for all traders and investors paving their way in the financial markets!

Today we will be covering:

• What is an ETF?

• Forex News: USD’s Value Starts to Slip Down

• Will Bitcoin’s ETFs be Publicly Traded Before 2024?

• Equity and Debt Markets Updates

• And more!

EDUCATION

What Is an ETF?

An Exchange-Traded Fund (ETF) is a particular type of pooled investment, similar to a mutual fund, that has become extremely popular in recent years. More specifically, an ETF is a basket of securities that is publicly traded on an exchange, just like stocks.

So, purchasing an ETF’s share is equivalent to buying a fraction of a share in each of the securities held in the ETF, making it the perfect tool for diversifying your portfolio. Additionally, directly purchasing the ETF has the added benefit of lowering broker commissions and reducing the costs of managing hundreds of individual shares simultaneously.

Finally, ETFs have a major advantage over mutual funds. Mutual funds shares can only be purchased during the trading day, but at a fixed price that will be determined at the end of the trading day. So, when purchasing a mutual fund’s share, you are doing it “blindfolded” as you will only know the actual price at the end of the trading session.

On the other hand, ETFs are publicly traded on the market just like stocks, so you can buy and sell them at anytime at a well-defined market price.

The first ever ETF to be created was the SPDR S&P 500 ETF (SPY) which, to this date, is still the main ETF that tracks the performance of S&P500 index. The SPY was launched at the beginning of 1993 so, in just a couple of months, it will be turning 31!

NEWS

The Relative Value of The US Dollar is Starting to Fall

The US Dollar, undoubtedly one of the most powerful currencies in the world, is regarded as a very important benchmark for standardizing profits and prices all around the world. Additionally, all the major publicly traded companies are listed in the US markets, so the relative value of each currency is an extremely important factor in the economy.

From a microeconomics perspective, a higher relative value of the US Dollar could cause two main factors:

• A decrease in realized company’s USD profits when converting the profits realized in foreign countries adopting the local currency.

• A reduction in the profit margin if the costs incurred by the companies are in USD while a substantial portion of sales occurs in foreign currencies.

However, it is important to know that oftentimes these types of variations are only temporary and will not create a long-lasting effect on the companies’ operations.

Likewise, from a macroeconomics point of view, a currency with a very high relative value might induce a reduction in foreign spending on domestic goods (exports), that if sustained for a long period time, might lead to a reduction in GDP.

The USD experienced a sudden and extremely powerful rally of more than 7% from the middle of July to the beginning of October. Now, after a month of consolidation, the value of USD is starting to come back down, alleviating the issues we briefly talked about before.

Just as a comparison, the Euro over the same timeframe slipped down by slightly over 1.5% and it is currently back to its mid-July price level.

NEWS

Are Bitcoin’s ETFs Going to be publicly Traded before 2024?

The extremely sought-after Bitcoin’s ETFs, which have been in the works for years, are currently under review by the SEC and will receive a response within the next week!

On the 8^th of November 12 fund managers filled their approval request with the Security and Exchange Commission for a spot ETF on Bitcoin, which will be reviewed, and eventually approved, between the 9^th and the 17^th of November.

For cryptocurrency fans, traders, and investors this is an extremely positive news as it would allow them to easily trade the first every crypto without incurring in the same cybersecurity risks of opening a crypto wallet and by benefitting from all the advantages that ETFs have over stocks and mutual funds.

However, even though most experts believe that the probability of Bitcoin’s ETFs being approved by the SEC is around 90%, they also believe that the actual launch will be delayed by at least a month, with the possibility of being postponed to the beginning of 2024.

This is mainly because fund managers must file two main documents: one for the Trading and Markets division and one for the Corporate Governance division of the SEC. The second of the two documents regards risk disclosure and fund transactions, two extremely delicate points that might require some back and forth between the SEC and the fund managers.

Today’s Howling Question

And now, let’s test your knowledge about the cryptocurrency world, and more specifically about Bitcoin.

When was Bitcoin created?

a)  3 years ago

b)  7 years ago

c)  10 years ago

d)  15 years ago

e)  17 years ago

Try to answer this question, then check the correct option and explanation after the next news!

NEWS

Equity and Debt Markets Update

Continuing where we left off with the previous newsletter, last week’s stock performance was extraordinary.

Even though the S&P500 (SPX) still continues to follow its channel down pattern quite diligently, starting last Monday the stocks rallied by almost 6% in a single week strongly reacting to their channel down support.

However, the exceptional stock performance of last week brought the SPX prices right under a significant resistance level which prices have tried to overcome without much success.

After trying to break out between Monday and Wednesday, the SPX had a strong reaction on Thursday which led to a decrease in price by -0.81% on the day.

Such a rejection on Thursday could have been expected because last week’s price surge had been extremely rapid, resulting in overextended prices compared to the moving average. However, unexpectedly, prices moved higher by +1.56% on Friday, a strong move that might signify the end of the downtrend and the beginning of a year-end rally.

On the other hand, all optimism should be kept under control because such a move up on Friday should have been justified by a break down of the government yields, below their support level. Such a situation did not occur, which might signify a false breakout of the equity side of the market.

We will see next week who will win this arm wrestling battle between equity and debt market.

Answer

The correct answer is d) 15 years ago.

The first ever cryptocurrency, Bitcoin, was officially created on the 31^st of October 2008 when Satoshi Nakamoto published on a cryptography mailing list his iconic paper titled: “Bitcoin: A Peer-to-Peer Electronic Cash System”.

However, the Bitcoin network only became operative on the 3^rd of January 2009 when Satoshi Nakamoto mined the genesis block of bitcoin, starting this amazing and innovative project.

HOWL-WORTHY MEMES

🐺 See you next time!

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