With the growth of cryptocurrency investors are searching for ways to increase their access to this asset. One way to achieve this is via the use of the use of a Bitcoin ETF, or exchange traded funds (ETF). An Bitcoin ETF (ETF) is form of investment product that follows the value of Bitcoin and is able to be traded on exchanges. In this article, we’ll review the advantages and disadvantages of Bitcoin ETFs and ways you can invest into them and the risk they carry.
What is a Bitcoin ETF?
The Bitcoin ETF is an exchange traded funds which tracks the value of Bitcoin and is able to be purchased and sold via an exchange. Bitcoin ETFs are like other ETFs as they track the actual asset, but they are different in that they’re specifically created to track the value of Bitcoin. Bitcoin ETFs fall under the same rules similar to other ETFs. This means they will be under the same scrutiny from The Securities and Exchange Commission (SEC) like other ETFs.
Pros of Bitcoin ETFs
The primary benefit of investing in an Bitcoin ETF is the way it lets investors get exposure to market for cryptocurrency without the need to purchase or store Bitcoin. Through investing in an Bitcoin ETF, traders will have access Bitcoin without having to go through the lengthy procedure of creating a wallet or purchasing Bitcoin as a digital currency. Furthermore, Bitcoin ETFs can provide investors with the liquidity that isn’t accessible through investing into Bitcoin directly.
Cons of Bitcoin ETFs
The biggest drawback of investing in an ETF is that it’s subject to risk that are associated with trading in cryptocurrency. As with all investments it is not guaranteed it will increase or decrease in value. investment will rise or fall. In addition, Bitcoin ETFs can be susceptible to extreme fluctuations due to their dependence on the market for cryptocurrency.
SEC Regulation of Bitcoin ETFs
The SEC has been reluctant to accept Bitcoin ETFs due concerns over the manipulation of markets and protection for investors. In this regard, they have issued guidelines to investors. SEC is releasing a variety specific guidelines for Bitcoin ETFs and has also required to ensure that ETFs be controlled in accordance to the Investment Company Act of 1940. In addition the SEC has mandated that Bitcoin ETFs satisfy certain criteria for example, having an amount of at least $200 million of assets under management, and the minimum amount of assets that have been invested in Bitcoin.
How to Invest in Bitcoin ETFs
A stake in an Bitcoin ETF is similar to investing in other ETFs. Investors can purchase shares in an Bitcoin ETF through a broker-dealer or financial advisor. In addition, investors might be able purchase Bitcoin ETFs from their issuer. Before investing in an Bitcoin ETF, investors should take into consideration the risks involved with the investment and their own risk tolerance as well as financial objectives.
Risks of Investing in Bitcoin ETFs
Making a bet on an Bitcoin ETF carries certain risks that include the possibility of market volatility as well as the risk of losing. In addition, Bitcoin ETFs can be subject to changes in regulation that could have an adverse effect upon the investment value. Furthermore, investors must be aware the fund cannot assurance in the event that value for this fund will go up or down.
Conclusion
The investment in an Bitcoin ETF is the ideal option for investors looking to be exposed to the market for cryptocurrency without the need to buy or store Bitcoin. But, investors should take note of risk associated with this investment in addition to the regulations set by the SEC. In addition, investors must consider their personal risk tolerance as well as their financial goals prior to making a decision to invest in an Bitcoin ETF.