What are BTC ETFs?
5 min readTable of Contents
BTC has come a long way, since the introduction of cryptocurrency exchange we have been looking for better ways to improve trading. crypto ETF is one of the new innovations created to improve trader’s experience just like BTC futures(horizons ETF) and Ether ETF.
It is a BTC exchange traded fund that tries to align with the value of BTC. Rather than being traded on a cryptocurrency exchange, it is traded on traditional markets.
Essentially, BTC ETFs allow traders to trade BTC without going through the stress of using a crypto exchange while maintaining the price of BTC.
What is an Exchange-Traded Fund (ETF)?
A simple way to look at an exchange-traded fund (ETF) is a security that tracks the value of the commodity, sector, and index, or any other thing that can be sold or purchased on a stock exchange just like a regular stock. The ETF’s prospectusis to track the price of an individual commodity to a large and diverse collection of securities. ETFs were also designed to track investment strategies.
What is a BTC ETF?
ETFs are traditional financial products that are guided and can be bought outside crypto exchanges.
How Does a BTC ETF Work?
BTC ETFs simply work by tracking the value of an underlying asset or index. It is also a form of investment. ETFs has been used long before cryptocurrency, and today it can be used for trading other asset class like commodities and currencies.
It is easier to buy and trade cryptocurrency ETFs instead of trading BTC which ordinarily seems stressful for many, the value of ETF is merely a reflection of Bitcoins value. If BTC worths $1000, the value of ETF automatically becomes $1000 the same applies to BTC when the price of ETF changes. So, it basically helps you trade BTC in the traditional market.
Why do we need BTC ETFs?
BTC ETF application gives an institutional investor the opportunity to buy and sell BTC from the traditional marketmore easily than if they are trading on an exchange. It’s also more affordable and easy to integrate into their portfolio, with this you’ll not have to stress yourself securing or storing it. If you are a digital asset trader, then you need a BTC fund.
How do ETFs impact BTC?
If BTC trade becomes easier, it automatically means more people are going to invest in it. When more people invest in it, the value naturally increases because there’s going to be an increase in demand. Just like I have already stated, ETFs are designed with the sole aim of making trading easier, this indirectly will amount to an increased BTC value.
Does investing in BTC work?
Yes, it works, BTC is crypto assets traded on an exchange for a management fee. Thanks to ETFs you can now trade it on the traditional platform while maintaining its original price. Other investment options like holding and day trading are also opened to investors. So without a doubt, investing in BTC works. It works like wall street and uses all financial instrument, trailing commissions, and a BTC wallet.
However, there is no guarantee that you are going to make a profit, no traditional investors can avoid risk, so you might as well give BTC Investment a try.
What is the best BTC ETF?
There are currently a handful number of BTC ETFs, picking the best is a difficult task. But here is a stat showing BTC ETFs based on performance.
ETF 1 month in % 3 months in %
WisdomTree BTC 28.74% 113.36%
21Shares BTC ETP 27.78% 118.25%
HANetf BTCetc BTC Exchange Traded Crypto 26.69% 120.21%
VanEck Vectors BTC ETN 29.30% 117.67%
Why does SEC oppose BTC ETF?
Canadian regulators and U.S Securities and Exchange Commission opinions remain the same when it comes to BTC and other cryptocurrencies. There’s this phobia towards the unregulated nature of BTC, this is probably the reason why they haven’t fully accepted blockchain or approved its asset as a legal tradable commodity leading to a lack of BTC trust.
Since the BTC market is not regulated, SEC and the Canadian securities regulators believe that these BTC ETFexchanges will not have a surveillance-sharing agreement and that’s the basic requirement for a CI galaxy BTC ETF, 3iq coinshares BTC ETF, and other platforms.
SEC stand is understandable, cryptocurrency is an unregulated asset, despite the mass adoption of Blockchain in the U.S market, still hasn’t fully approved blockchain funds this firm stand has made investments in the digital currency space slow.
What is the future of BTC ETF?
Nobody really knows what the future holds for BTC ETF approval, but enthusiasts believe that in the future, there’s going to be improved adoption, as well as a node from SEC. We are all anticipating regulatory approval from SEC. Only then can we fully enjoy trading evolve ETFs without fear of crossing the line.
One thing for sure is that a lot of people believe in EFT the only hitch is the fact that platforms are unregulated causing a delay in approval from SEC. Let’s see what the future holds, especially exchange traded products.
Just like I stated early in this article, ETF is designed to make transactions for any asset manager easy while maintaining the value of your mutual fund, current net asset value, and investment objective.
BTC ETF FAQs
Is BTC ETF approved by SEC?
Cryptocurrencies are still trying to prove that they are a reliable trading commodity, so it’s not just ETFs, the entire industry is still hoping for approval.
Is ETF Reliable?
Yes, it is, it is an institutional financial strategy that is currently used by thousands of users since its launch. it is a good way to invest and is related to stocks.
What makes ETF Different from BTC?
It was launched with the sole purpose of making BTC trade easier. a similar strategy is used in stocks. The essence is to mirror BTC price, ensuring your investment fund maintain their value and tracks related transactions.
