US Bitcoin ETFs: Understanding fair value

QuestDB is an advanced database designed for market data, offering high ingestion throughput, enhanced SQL analytics, and efficient hardware use, making it suitable for tick data. In the context of Bitcoin Exchange-Traded Funds (ETFs) now available in the U.S., the text explores ETF trading dynamics, particularly focusing on the concepts of primary and secondary markets, and the mechanisms that affect pricing, such as Creation/Redemption, Premium, and Discount. ETFs trade on both primary and secondary markets, with market-makers playing a crucial role in maintaining liquidity by posting executable quotes, which can influence the ETF's price relative to its Net Asset Value (NAV). Skews in pricing on launch days and other market pressures can cause ETFs to trade at a Premium or Discount, despite mechanisms like Creation/Redemption designed to minimize such deviations. The text emphasizes the importance of understanding these dynamics to ensure fair trading and using market data to calculate fair values, highlighting the potential for temporary pricing deviations and the necessity of being informed to avoid trading at unfavorable prices.