As the popularity of Bitcoin engulfs everyday news and finances, you may have come across Bitcoin exchange-traded funds (ETFs) that have been trending lately.
As the popularity of Bitcoin engulfs everyday news and finances, you may have come across Bitcoin exchange-traded funds (ETFs) that have been trending lately.
Exchange traded funds, in their true sense, are an investment tool. Like low-cost stocks, ETFs are purchased through a brokerage and can be traded on any market. Bitcoin ETFs reflect the price of Bitcoin and allow investors to expose themselves to the asset without owning it themselves. In other words, the people who invest in the fund own a significant number of shares in a Bitcoin ETF. Two big reasons people invest in Bitcoin ETFs is because they are traded on traditional exchanges rather than crypto exchanges. This is a great advantage for people who do not know much about cryptocurrencies, but are still interested in buying bitcoins.
Why do people invest in Bitcoin ETFs?
ETFs allow investors to diversify their portfolio and minimize investment risks, as the mutual fund tracks the prices of bitcoin and other market stocks as well. New types of exchange-traded funds have entered the public markets with the arrival of ETFs tied to NFTs, blockchain companies, and Bitcoin futures, allowing investors to speculate on the future price of cryptocurrencies.
But a Bitcoin ETF may not reflect the real-time returns of cryptocurrencies. If the value of bitcoin appreciates by 50%, this does not necessarily mean that investors will see the value of their BTC ETF increase, especially when the ETF has other assets. Another downside is that the convenience of using Bitcoin ETFs also comes at the price of high administration fees.
Is it worth investing in Bitcoin ETFs?
On October 19, 2021, the Bitcoin-linked fund (ProShares) became the fastest ETF to grow more than $ 1 billion in assets. However, some have questioned the viability of Bitcoin Futures ETFs. Capital Advisors CEO Charlie Bilello noted that these ETFs have underperformed the BTC spot pair since 2018.
Industry experts have challenged the aforementioned data, with some regulatory decisions:
Whether it’s poor performance or inaccuracy, many speculate whether it is better to buy bitcoin outright. Bitcoin ETFs became part of the investment universe in 2013, during a time when cryptocurrencies were difficult to buy. Now, various crypto exchanges have user-friendly apps and are generally more people-centric. BitOasis, for example, allows people to buy bitcoins in the UAE with dirhams or Saudi Riyals with local financing options that offer 0% deposit fees to customers with bank accounts in the UAE. BitOasis has also received key regulatory approvals that make it a secure platform for buying and selling bitcoins and other cryptocurrencies. For more information, visit BitOasis.