How do Bitcoin ETPs work?
2 min readAn Exchange Traded Product (ETP) makes investing in cryptocurrencies like Bitcoin easier. ETPs are exchange-traded products that track the performance of assets. These can be individual cryptocurrencies, but also entire baskets of coins. This makes it possible, for example, to invest in several crypto projects at the same time with just a single investment.
Who are ETPs on cryptocurrencies suitable for?
Exchange-traded products for cryptocurrencies are particularly suitable for investors who value having to deal with as few technical details as possible when investing. Because anyone who invests in a Bitcoin ETP does not own the coins themselves. There is no need to set up a wallet and the associated security measures.
However, this also means: Not your keys, not your coins. In other words: Your BTC are managed by an external party, you do not have access to your private keys yourself. The decentralization and the associated shift of power away from big players is thus taken ad absurdum. From an investment theory point of view, however, this is a solid opportunity to invest in the crypto market.
What are examples of crypto ETPs?
A well-known provider of ETPs on Bitcoin and Co. is 21Shares. Amun’s subsidiary currently has over 30 cryptocurrency exchange-traded products listed. These also include baskets such as the Bitcoin Suisse Index ETP (BTC & ETH), the Crypto Mid-Cap Index ETP (the largest blockchain projects excluding Bitcoin and Ethereum) and the Crypto Basket Index ETP (development of the five strongest cryptocurrencies). Other well-known providers are VanEck, WisdomTree, SEBA Bank, Sygnum or the ETC Group.
