What is Bitcoin exchange traded fund
During the recent past, we heard a lot of news about the Bitcoin ETF that was set by Cameron and Tyler Winklevoss. However, most of the people who are making transactions with crypto money and engaged with cryptocurrency mining don’t have a clear understanding on what exactly Bitcoin ETF is. If you are looking forward to use Bitcoin or invest in Bitcoin in the future, it is important for you to have a clear understanding about Bitcoin ETF as well.
What exactly is an ETF?
Before exploring what the Bitcoin ETF is, you need to be aware about the clear definition of an ETF. The term ETF stands out for Exchange Traded Fund. It can simply be defined as a method that is being used to track the performance of an asset. It would tell you that your investment would be equivalent to the asset that you own. The asset can be stocks, bonds, gold, oil or currency.
ETF is an excellent method available for the people to invest in a specific asset. That’s mainly because you don’t need to own the asset. Most of the traders aren’t concerned about owning the asset. They just care about the profit and loss that they will be able to receive at the end of the day. ETFs are the ideal solution available for such traders.
Along with the development of technology, digital currencies such as Bitcoin came into the world. Hence, people started using them as assets as well. It can be considered as the origin of Bitcoin ETF.
What is Bitcoin ETF?
Now you will have a basic idea about what Bitcoin ETF is. Bitcoin ETF is a unique type of an ETF. It has the ability to mimic the price of Bitcoin. Another important fact that you need to keep in mind is that Bitcoin ETFs are placed on Bats Exchange to be traded. Hence, all the people who trade on Bats will be provided with the opportunity to invest their money on the crypto money. This can keep you away from the frustration associated with owning Bitcoin. If you own Bitcoin, you will have to take necessary steps in order to store them and enhance the security of them. But when you go for Bitcoin ETF, you can avoid that frustration from your mind.
If you feel that Bitcoin prices are about to explode in the near future, you just need to go ahead and buy Bitcoin ETF. In here, you will not have to spend your money on Bitcoin, but you will be able to receive all the benefits that are linked with the price hike.
What are the benefits linked with Bitcoin ETF?
Bitcoin ETF is associated with a variety of benefits. Due to this reason, all the people who are investing on the electronic currency have paid their attention towards it. The most prominent benefit linked with Bitcoin ETF is that you don’t need to own Bitcoins to experience all the benefits that are provided along with it. Hence, Bitcoin investments have become more accessible for the people in need.
It is also possible for you to equate Bitcoin ETF to an investment vehicle. Due to this reason, you are provided with the ability to short sell at any time you want. If you feel that the market would go down in near future, you just need to go ahead and sell. On top of everything, Bitcoin ETF can people away from the frustration associated with understanding the cryptocurrency. You don’t need to have any idea at all about Bitcoin to invest in ETF and receive the benefits that are linked with it. Moreover, you don’t have to take necessary steps to provide the protection that is needed by the cryptocurrency as well. This can deliver peace of mind to you in the long run.
Are there any drawbacks associated with Bitcoin ETF?
Yes, there are some drawbacks associated with Bitcoin ETF and you need to have a clear understanding about them to avoid hassle in the future. At the moment, Bitcoin ETF is not protected with an insurance coverage. If your coins are stolen or lost, you will have to bear it up.
All the people who go ahead and invest their money on Bitcoin ETF will have to make a fee of 2% as well. However, this will not be a major issue for most of the traders. That’s mainly because 2% is a relatively low fee, when compared to the fee that you spend while purchasing Bitcoin. Since this is a more convenient option available to try than purchasing Bitcoins, you can go ahead with it without keeping any doubts in mind.
Can Bitcoin ETFs create an impact on the Bitcoin prices?
As you already know, Bitcoin prices are skyrocketing. At one point of time, you would wonder whether Bitcoin ETFs are responsible for the hike of cryptocurrency prices or not.
Various studies have been conducted in the past to determine whether Bitcoin ETFs are in a position to create an impact on the crypto money prices or not. Even though nobody has come to a firm conclusion based on these studies, it is possible to take a look at some of the key findings that were extracted.
With Bitcoin ETFs, more people will be provided with the opportunity to invest in the cryptocurrency. This can increase the demand of Bitcoin. As a result, the price associated with Bitcoin would gradually increase. To get a better idea about the above mentioned fact, you need to take a look at what happened when gold ETFs were introduced during the year 2000. Since the introduction of gold ETF, more people started investing on it. Due to this reason, the price of gold tripled within just 5 years. We can expect the same thing to happen with Bitcoin ETFs as well.
As you can see, Bitcoin ETF is an excellent opportunity available for all individuals who are interested in investing in Bitcoin. Therefore, you can go ahead and take a look at what you can gain out of this investment opportunity.