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. Just like low-cost stocks, ETFs are bought through a brokerage and can trade on any exchange. Bitcoin ETFs mirror the price of bitcoin and allow investors to get exposure to the asset without actually owning it themselves. In other words, people who invest in the fund own a significant amount of shares in a Bitcoin ETF. Two big reasons why 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 don’t know much about cryptocurrencies, but are still interested in buying bitcoin.
Why are people investing in Bitcoin ETFs
ETFs allow investors to diversify their portfolio and minimize investment risks, as the investment fund tracks the prices of bitcoin and other market stocks too. New types of exchange-traded funds have entered public markets with the arrival of ETFs tied to NFTs, blockchain companies, and Bitcoin Futures – that allow investors to speculate on the crypto’s future price.
But a Bitcoin ETF may not reflect real-time returns from crypto. If bitcoin’s value appreciates by 50%, this doesn’t necessarily mean that investors will see the value of their BTC ETF increase, especially when the ETF holds other assets. Another disadvantage is that the convenience of using Bitcoin ETFs comes at the price of high management fees too.
Is it worth investing in Bitcoin ETFs
On October 19, 2021, Bitcoin-linked fund (ProShares) became the quickest ETF to grow over $1 billion in assets. However, some have questioned the viability of Bitcoin Futures ETFs. CEO of Capital Advisors, Charlie Bilello pointed out that these ETFs have under-performed, compared to the BTC spot pair, since 2018.
Industry experts have challenged the aforementioned data, with some calling out regulatory decisions:
Be it under performance or inaccuracy, many speculate whether it is better to buy bitcoin directly. Bitcoin ETFs became a part of the investing universe in 2013, during a time when it was difficult to buy crypto. Now, several crypto exchanges have user-friendly applications and are more people centric overall. BitOasis, for instance, allows people to buy bitcoin in UAE with dirhams or Saudi riyals with local funding options that offer 0% deposit fees to customers with UAE bank accounts. BitOasis has also received key regulatory approvals that make it a secure platform to buy and sell bitcoin and other cryptocurrencies. To learn more, visit BitOasis.
