Bitcoin now is a global fame currency which is now even accepted in India. Initially, there were doubts over its existence as it was a new concept which no one approved it. Even though it took time to prove its worth finally it made it a popular cryptocurrency. But today, we are going to discuss beyond Bitcoin. If you are new to the concept of cryptocurrency, then apart from Bitcoin, you must also know about Bitcoin ETF. In this blog, we will be discussing this term and also about the best cryptocurrency ETF. Since the launch of regulated Bitcoin futures contracts on the CME and CBOE, the much public-traded Bitcoin ETFs are once again back to notice. During the years 2018 to 2019, the U.S. Securities Exchange Commission, did not give any approval to a single Bitcoin ETF.
Know About Bitcoin ETF
ETF stands for exchange-traded funds. When the price of stocks, gold, an index, or oil is being tracked through an investment fund, then it is ETF. The trading of ETF on exchanges is equivalent to stocks. This becomes very easy for buying and selling of holdings in an ETF for every retail investor. In comparison to mutual funds, ETFs are much cheaper because they are mostly the index-tracking funds. Private investors are allowed to make the best use of asset classes, where it is very difficult for investing. One fact which you must know about Bitcoin ETF is that if you choose to purchase it, then it will similar to buying Bitcoin indirectly. Still, there is a difference between buying a Bitcoin itself and buying a Bitcoin ETF. The difference reveals that investors would prefer to go for regulated investment, which is a much easier way of buying and selling on exchanges in comparison to buying and storing Bitcoin securely.
However, the price of Bitcoin is tracked closely by the ETF. It does make a difference for an investor to hold actual Bitcoin or Bitcoin ETF.
Investing In Bitcoin ETF
Currently, on U.S. exchanges, there are no cryptocurrency ETF funds but on European exchanges, there is the availability of exchange-traded Bitcoin financial products, where investors can invest. Launched in 2013, Bitcoin Investment Trust is another way where in the form of a regulated investment vehicle, the purchasing of Bitcoin can prove to be a big opportunity for accredited investors. On behalf of investors, this trust performs the role of an ETF by owning Bitcoin and enables trading in shares of the trust.
In regard to crypto ETF approval, investors are supposed to pray to the U.S. SEC (Securities and Exchange Commission). Factors like stock markets and ETF are more likely to affect the underlying value of Bitcoin ETF.
Analyzing Crypto ETFs Benefits
Analyzing the benefits of Cryptocurrency ETFs, there is much to see outlandish gains experienced by cryptocurrencies which are much successful. But the worst part reveals the darker side in the form of uncertainty due to the high volatility issue. This becomes the reason for the participation in the crypto space by investors using ETF. This is something that you must know about Bitcoin ETF. Digital wallets and exchanges are often at risk of hacking and theft. Seeing their assets becoming disappear with no recourse is what investors have to experience while holding their digital tokens. But in the case of Bitcoin ETF, an added layer of security is being included in the custodian bank which accepts the ETF.
Cryptocurrency ETF has another benefit of tracking the number of crypto tokens at one go. The exposure of Bitcoin price depends upon the proper construction of the Bitcoin ETF.
Shareholders will find a sigh of relief from being protected by the insurance component in regard to the operational risks of sourcing. An important point that must be note is that in terms of market share and liquidity, Bitcoin has many advantages in the absence of ETFs for altcoins. To know about Bitcoin ETF, you must also be knowing that Cryptocurrency space is much supported by blockchain technology which is linked with digital tokens. ETFs like BLOK and BLCN let investors access those firms which are concentrated on blockchain space. These ETFs have tasted immense success.
There is always a curiosity behind the Bitcoin being a dominant cryptocurrency. Well, the main reason behind this is the availability of on and off-ramps globally. People find much comfort in carrying their digital assets in and out. If there is any major gateway for Bitcoin token, then it is an approved Bitcoin ETF.
So this was all you need to know about Bitcoin ETF. For those who are new to the crypto world and are limited with the knowledge of Bitcoin must update themselves while knowing about Bitcoin ETFs and what role does it play in the world of cryptocurrency. Well, for that you need to know about the basic understanding of the ETF. It is a way of tracking the performance of the asset in a group or particular. Investors are allowed to diversify their investments by the ETFs with no need of owning the assets. For those whose main concern is profit or loss, ETF helps them by offering an alternate option for buying and selling Individual assets.