Bitcoin has come a long way, since the introduction of cryptocurrency exchange we have been looking for better ways to improve trading. crypto ETF is one of the new innovations created to improve trader’s experience just like bitcoin futures(horizons ETF) and Ether ETF.
It is a Bitcoin exchange traded fund that tries to align with the value of Bitcoin. Rather than being traded on a cryptocurrency exchange, it is traded on traditional markets.
Essentially, Bitcoin ETFs allow traders to trade Bitcoin without going through the stress of using a crypto exchange while maintaining the price of Bitcoin.
What is an Exchange-Traded Fund (ETF)?
A simple way to look at an exchange-traded fund (ETF) is a security that tracks the value of the commodity, sector, and index, or any other thing that can be sold or purchased on a stock exchange just like a regular stock. The ETF’s prospectusis to track the price of an individual commodity to a large and diverse collection of securities. ETFs were also designed to track investment strategies.
What is a Bitcoin ETF?
ETFs are traditional financial products that are guided and can be bought outside crypto exchanges.
How Does a Bitcoin ETF Work?
Bitcoin ETFs simply work by tracking the value of an underlying asset or index. It is also a form of investment. ETFs has been used long before cryptocurrency, and today it can be used for trading other asset class like commodities and currencies.
It is easier to buy and trade cryptocurrency ETFs instead of trading bitcoin which ordinarily seems stressful for many, the value of ETF is merely a reflection of Bitcoins value. If Bitcoin worths $1000, the value of ETF automatically becomes $1000 the same applies to Bitcoin when the price of ETF changes. So, it basically helps you trade Bitcoin in the traditional market.
Why do we need Bitcoin ETFs?
Bitcoin ETF application gives an institutional investor the opportunity to buy and sell Bitcoin from the traditional marketmore easily than if they are trading on an exchange. It’s also more affordable and easy to integrate into their portfolio, with this you’ll not have to stress yourself securing or storing it. If you are a digital asset trader, then you need a Bitcoin fund.
How do ETFs impact Bitcoin?
If Bitcoin trade becomes easier, it automatically means more people are going to invest in it. When more people invest in it, the value naturally increases because there’s going to be an increase in demand. Just like I have already stated, ETFs are designed with the sole aim of making trading easier, this indirectly will amount to an increased Bitcoin value.
Does investing in Bitcoin work?
Yes, it works, Bitcoin is crypto assets traded on an exchange for a management fee. Thanks to ETFs you can now trade it on the traditional platform while maintaining its original price. Other investment options like holding and day trading are also opened to investors. So without a doubt, investing in Bitcoin works. It works like wall street and uses all financial instrument, trailing commissions, and a Bitcoin wallet.
However, there is no guarantee that you are going to make a profit, no traditional investors can avoid risk, so you might as well give Bitcoin Investment a try.
What is the best Bitcoin ETF?
There are currently a handful number of Bitcoin ETFs, picking the best is a difficult task. But here is a stat showing Bitcoin ETFs based on performance.
ETF 1 month in % 3 months in %
WisdomTree Bitcoin 28.74% 113.36%
21Shares Bitcoin ETP 27.78% 118.25%
HANetf BTCetc Bitcoin Exchange Traded Crypto 26.69% 120.21%
VanEck Vectors Bitcoin ETN 29.30% 117.67%
Why does SEC oppose Bitcoin ETF?
Canadian regulators and U.S Securities and Exchange Commission opinions remain the same when it comes to Bitcoin and other cryptocurrencies. There’s this phobia towards the unregulated nature of Bitcoin, this is probably the reason why they haven’t fully accepted blockchain or approved its asset as a legal tradable commodity leading to a lack of bitcoin trust.
Since the Bitcoin market is not regulated, SEC and the Canadian securities regulators believe that these Bitcoin ETFexchanges will not have a surveillance-sharing agreement and that’s the basic requirement for a CI galaxy Bitcoin ETF, 3iq coinshares Bitcoin ETF, and other platforms.
SEC stand is understandable, cryptocurrency is an unregulated asset, despite the mass adoption of Blockchain in the U.S market, still hasn’t fully approved blockchain funds this firm stand has made investments in the digital currency space slow.
What is the future of Bitcoin ETF?
Nobody really knows what the future holds for Bitcoin ETF approval, but enthusiasts believe that in the future, there’s going to be improved adoption, as well as a node from SEC. We are all anticipating regulatory approval from SEC. Only then can we fully enjoy trading evolve ETFs without fear of crossing the line.
One thing for sure is that a lot of people believe in EFT the only hitch is the fact that platforms are unregulated causing a delay in approval from SEC. Let’s see what the future holds, especially exchange traded products.
Just like I stated early in this article, ETF is designed to make transactions for any asset manager easy while maintaining the value of your mutual fund, current net asset value, and investment objective.
Bitcoin ETF FAQs
Is Bitcoin ETF approved by SEC?
Cryptocurrencies are still trying to prove that they are a reliable trading commodity, so it’s not just ETFs, the entire industry is still hoping for approval.
Is ETF Reliable?
Yes, it is, it is an institutional financial strategy that is currently used by thousands of users since its launch. it is a good way to invest and is related to stocks.
What makes ETF Different from BTC?
It was launched with the sole purpose of making BTC trade easier. a similar strategy is used in stocks. The essence is to mirror Bitcoin price, ensuring your investment fund maintain their value and tracks related transactions.