Cryptocurrency-related financial products can be accessed through Bitcoin ETFs.
Cryptocurrency markets have been on a rollercoaster ride for years, but Bitcoin finally made its debut on Wall Street in 2021 after years of ups and downs. Several exchange-traded funds have followed ProShares in launching the first Bitcoin-linked ETF.
There is no direct investment in Bitcoin in these ETFs. Cryptocurrencies are rather paired with financial products, such as futures contracts. Although Bitcoin ETFs are not new to cryptocurrency trading, their introduction means that ordinary investors are now able to invest in volatile assets without the hassle of dealing with Bitcoin Wallets.
An explanation of Bitcoin ETFs
An ETF that invests in Bitcoin combines many of the advantages of both types of investments.
Similar to other ETFs, the products operate similarly. The ProShares ETF, on the other hand, tracks a related financial product rather than market movements.
How can Bitcoin ETFs benefit investors?
In addition to simplifying the world of cryptocurrency investment, investing in a Bitcoin ETF can provide investors with various advantages.
It can be challenging to store and secure Bitcoin itself. Several investors have lost their passwords and been unable to access their Bitcoins (often with millions of dollars at stake). About 18% percent of Bitcoin may be lost or inaccessible, according to cryptocurrency research and software firm Chainalysis.
ETFs also offer the advantage of being traded directly from investors’ existing brokerage accounts. ETFs can be bought and sold through more conventional channels despite the advent of mainstream crypto exchanges.
Regulatory framework for bitcoin exchange-traded funds
Bitcoin ETFs were first created in 2013. During the lengthy review of the topic by the Securities and Exchange Commission, there were concerns raised about possible manipulations and fraud associated with an ETF for Bitcoin. Cryptocurrency ETFs have not yet been approved by the SEC.
There have been several crypto products approved in Europe and Canada that seem not to have the same issues as the SEC with Bitcoin ETFs.
Cryptocurrency investment alternatives
It is important to approach cryptocurrencies with caution since they are still relatively new. The following are some strategies you can use to invest in crypto if you’re enthusiastic about it and have room in your portfolio:
- Using cryptocurrency directly
There are more and more places to use Bitcoin – you can even purchase items on Amazon using it. Cryptocurrencies come in many forms. Cryptocurrencies are gaining popularity, but Bitcoin is not a safe bet because it’s the biggest and most established. Every new investment should be treated with caution.
- Investments in cryptocurrencies
Investing in the future of money doesn’t require navigating a whole new currency. Additionally, blockchain ETFs are available. A number of companies are involved in the development and utilization of blockchain, the technology behind cryptocurrencies. In addition to investing directly in cryptocurrencies, there are several ETFs that include these companies.
Whatever be the case but for beginners storing Bitcoins in a Bitcoin wallet still proves to be a safe place.