What is a Bitcoin ETF?
An exchange-traded fund (ETF) is a type of investment vehicle that monitors the performance of a specific asset or group of assets, such as the oil or technology industry. ETFs allow investors to diversify their portfolios without having to hold the actual asset. Therefore you only have exposure to the price movement.
The new Bitcoin ETF is a fund that tracks the price of the world’s most popular digital currency.
This allows investors to invest in the ETF without having to go through the process of buying or selling bitcoin. Furthermore, because the ETF would not be directly invested in bitcoin, holders will not have to worry about the storage and security protocols that cryptocurrency investors must follow.
The first Bitcoin EFT was launched on October 19th 2021 and on the first day of trading reached close to 1 billion dollars. This overwhelming interest promises a bright future for the acceptance of Bitcoin globally.
Why not invest directly in bitcoin?
For investors who do not feel confident owning bitcoin to trade, the ETF has some benefits. They do not have to store their BTC in a cryptocurrency wallet. Furthermore, investors do not need to buy Bitcoin on cryptocurrency exchanges because the ETF may be purchased and sold through regulated exchanges.
But, perhaps most importantly, ETFs are far more well-known in the investment world than cryptocurrencies, even though digital coins and tokens are becoming increasingly popular. Instead of learning the ins and outs of something new, an investor interested in digital currency may focus on trading a vehicle they already know.
For these reasons, investing in an ETF might be more appealing, but for many investors, it defeats the object of owning bitcoin. Bitcoins main feature is that it’s decentralized; therefore, having complete control and ownership makes it appealing.
What does this mean for Bitcoin?
It is hard to say, but we see this as a massive step forward in the mass acceptance of Bitcoin. Bitcoin ETF being introduced confirms the knowledge that bitcoin is worth something and not a ‘valueless’ craze.
