The Mystery Behind Bitcoin ETFs

Bitcoin ETFs are all the craze these days. So, what do we know about them?

Meet Bitcoin ETF

The price of a share of one would roughly track the price of Bitcoin, which provides the exposure to Bitcoin without having to buy cryptocurrency directly, understand how it works, or work out how to store it. Apart from that, you can trade it on publicly traded stock markets, alongside shares in the companies that run companies such as Facebook or Pizza Hut.

The More You Know

Another thing is that a Bitcoin ETF wouldn’t consist only of Bitcoin. For e.g.) A bitcoin ETF would consist of bitcoin, Apple shares, Facebook shares and more. This offers an opportunity to investors to reduce risk and diversify their portfolio.

The Problems

Zooming Out

Where the U.S is worried, Canada is not as the latter has approved two bitcoin ETFs in February. Just one month after the launch, the first ever Bitcoin ETF called the Purpose Bitcoin ETF has touched the $1 billion mark in assets under management. That’s a huge amount!

If you think Canada is the frontrunner on the whole Bitcoin ETF episode, then you should know about Europe. In Europe, several ETPs exist that behave in almost exactly the same way, the biggest of which has been trading for more than five years. An FT article writes, “…Europe has already approved 23 cryptocurrency ETFs, which had combined assets of $6.3bn at the end of February, according to ETFGI, a consultancy.”

Even though Bitcoin ETFs sound like a great product, it has its own risks. The highly unregulated crypto market causes worries to investors and regulators alike, but bitcoin ETFs have a huge potential. Although it might be a good thing for them to be legalized, regulators also have to be very cautious about how these ETFs will be designed and draw a detailed framework for their trading.

Head to moneyguru’s Insight section to stay updated on all major financial news updates of the day!

Your Best Direct Mutual Fund Investing Experience Begins Here. Invest, Read and Track — at one place & for free! vist us at: www.moneyguru.in