Bitcoin ETFs hold assets and are not ‘paper bitcoins’

Exchange-traded fund (ETF) analysts have dismissed rumors that the spot bitcoin fund is backed by ‘paper bitcoin' or fractional reserves. Instead, they are fully supported by the property, which means that issuers must be loaded.

Rumors have been swirling about support for Bitcoin exchange-traded funds, which have been threatened before its January launch.

Bitcoin ETFs backed by BTC

There are several comments that suggest that the products are not backed by ‘paper Bitcoin' but by the asset itself. Last week, Daisy founder Danny Kroger said:

“If Bitcoin ETFs are just ‘cash in, cash out,' doesn't it look like paper Bitcoin? The worst that can happen is that it could lead to an endless price drop.”

Other comments have suggested that fractional backups may be supported. Fractional reserves are systems in which banks only hold a portion of their deposits in cash.

However, on December 28, ETF Store President Nate Geraci denied the rumors.

“Spot bitcoin ETFs actually hold the original bitcoin,” he said, adding, “I'm seeing more “paper bitcoin” comments out there.

“The total value of the trust is *fully backed* by real Bitcoin. time.”

Read more: How to prepare for a Bitcoin ETF: A step-by-step approach

“It takes a lot of bad bitcoin ETFs,” said Bitcoin ETF analyst James Seifert. “People are simply uninformed (pretty) and very gullible,” he said, before confirming that “Spot Bitcoin ETFs hold Bitcoin.”

In a separate post, Gerasi said that with 14 candidates in the running, the next 48 hours will be “wild” as producers get their ducks in a row.

Current incumbents are Greyscale ARK, iShares, Bitwise, VanEck, WisdomTree, Invesco, Fidelity, Valkyrie, Global X, Hashdex, Franklin, Pando and 7RCC.

In addition, December 29 is the deadline set by the Securities and Exchange Commission for filing final filings and applications.

Ark is sold by Greyscale Trust Holdings

In related news, ETF analyst Eric Balchunas reports that Ark has sold its remaining Grayscale Bitcoin Trust (GBTC) position.

He pointed out that the company bought half of the money, about 100 million dollars worth of BITO shares. BITO is the first of its kind ProShares Bitcoin Strategy ETF launched in October 2021.

“As such, ARK is now BITO's second largest owner, although again this is a temporary parking lot,” he said, adding that institutions generally use highly liquid ETFs for such transfers.