Bitcoin, the crypto king, will likely meet the passive investing queen soon. Bitcoin exchange-traded funds will reshape the crypto investment landscape upon becoming commonplace. Finding Bitcoin ETFs is challenging, and they are inexistent in some countries, like the U.S. Traditionally, the SEC has been reluctant to approve them because of the crypto market's unregulated nature. Nevertheless, this market has grown, and it's moderating itself.
Also, several crypto exchanges implement several measures to protect users. Some platforms where people trade and invest in Bitcoin adhere to strict regulations by custodian banks. Others operate like Money Service Businesses with the necessary permits and licenses. So, if you are starting to invest in Bitcoin, you must have a reputable trading platform such as Matrixator.com.
Besides, some countries have approved Bitcoin ETs. For instance, the Purpose Bitcoin ETF in Canada has accumulated over $1 billion in assets two months after its launch. In Brazil, authorities have also approved the first Bitcoin ETF.
Understanding Bitcoin ETF
A Bitcoin ETF refers to an exchange-traded fund holding Bitcoin. It's like an ETF that holds bonds, stocks, or gold. However, the challenge is that no genuine Bitcoin ETF exists in countries like the U.S. Currently, Bitcoin ETFs use the futures market to offer losses or returns to investors in most countries. Thus, they hold derivatives or futures contracts instead of actual Bitcoin. Fidelity and BlackRock have sought spot Bitcoin ETF approval. These Bitcoin ETFs have the backing of genuine on-the-blockchain Bitcoin. Together, these companies manage almost $15 trillion in assets.
Why Bitcoin ETFs and Not the Actual Cryptocurrency?
Bitcoin ownership has numerous advantages. For instance, you can trade Bitcoin without intermediaries. Thus, you enjoy more control over your crypto asset. Bitcoin trading is lucrative for those who take advantage of the correct opportunities.
For example, you can monitor the crypto market and analyze market trends to benefit from price increases. Remember, Bitcoin is a highly volatile asset with sharp price increases and decreases. Therefore, constantly monitor the crypto market and investigate trends to exploit favorable conditions. That said, Bitcoin ETFs offer the following advantages.
Liquidity Potential
Many institutions and financial managers will likely pick up a Bitcoin ETF because they consider them risk mitigators. ETFs track various assets, making them less vulnerable to significant fluctuations. Therefore, as an investment option, Bitcoin ETF would increase liquidity and trading volume, making it easy to sell. Since people trade ETFs on traditional markets, they become a popular option, increasing liquidity.
Accessibility
Crypto trading and investing involve a learning curve since the market is in its infancy, and several hoops exist for newbies to jump through. ETFs have existed for a long time. Also, the conventional stock market is user-friendly, with good brokers ready to manage investors' portfolios.
ETFs represent a user-friendly option and are suitable for passive investing. Bitcoin ETFs provide a way to diversify an investment portfolio and gain exposure to more securities.
Safety
You've probably heard stories of people who have lost Bitcoins worth thousands of dollars after losing or damaging hard drives. Unfortunately, recovering lost Bitcoins is a nightmare, yet cold storage wallets like hard drives are prone to loss and breakages. Hot storage is almost impossible to break or lose, but hackers can access and steal your Bitcoin.
Large companies would manage Bitcoin ETFs. These firms would have extensive security measures. Also, they would have insurance to protect investors. Thus, Bitcoin ETFs provide better security and fund diversification.
Final Word
Bitcoin ETFs can have numerous benefits, especially for cautious investors. Unfortunately, they are currently unavailable in most countries. But with countries like Canada and Brazil launching them, it's apparent that Bitcoin enthusiasts will access these ETFs pretty soon. After all, Bitcoin and ETFs are both popular globally.
