Transactions for spot Bitcoin by way of exchange-traded funds (ETFs) had been a distant dream in 2013 when the Winklevoss twins submitted the primary software for an ETF monitoring the cryptocurrency’s worth.
Over 10 years later, in 2024, america Securities and Trade Fee authorised the primary batch of spot Bitcoin (BTC) ETF purposes from a mixture of crypto native and conventional monetary establishments. The approvals, nevertheless, led to questions concerning the variations between shopping for Bitcoin in a peer-to-peer transaction on an change and investing in Bitcoin ETFs.
What’s the distinction between proudly owning Bitcoin ETFs and proudly owning Bitcoin? Like Bitcoin, do ETFs provide income? All of those questions and extra are answered in Cointelegraph’s new video, Legends & Myths about Bitcoin ETFs Debunked, which breaks down the commonest misconceptions about Bitcoin ETFs.
Fable: A Bitcoin ETF is similar as proudly owning precise Bitcoin
When it comes to possession, Bitcoin and ETFs are totally different. Whenever you put money into a Bitcoin ETF, you purchase shares within the fund, not the precise Bitcoin itself. This implies you’re uncovered to the worth actions of Bitcoin with out proudly owning it straight.
Proudly owning precise Bitcoin includes shopping for the digital foreign money straight and storing it in a digital pockets. On this method, you’re in command of the personal keys and, due to this fact, your cash.
Truth: A Bitcoin ETF tracks the worth of Bitcoin however doesn’t provide you with possession of precise Bitcoins.
Fable: Bitcoin ETFs assure revenue identical to Bitcoin
Neither funding gives a assured revenue. In actual fact, investing in a Bitcoin ETF or straight in Bitcoin carries threat, as the worth of Bitcoin is very risky.
Keep in mind, the Bitcoin ETF mimics Bitcoin’s worth actions, which suggests its worth can fluctuate primarily based on market circumstances. Earlier than investing in Bitcoin ETFs or Bitcoin itself, traders ought to do their very own analysis and contemplate their threat tolerance.
Truth: Bitcoin ETFs, like all investments, include dangers, and there’s no assure of income.
Fable: Bitcoin ETFs are as risky as Bitcoin
Whereas Bitcoin ETFs are designed to trace the worth of Bitcoin, they could not mirror its fluctuations completely.
Bitcoin is thought for its excessive volatility, which may end up in substantial worth modifications inside brief intervals of time. Alternatively, a Bitcoin ETF, being traded on a regulated inventory change, might expertise much less volatility because of market mechanisms like buying and selling hours and the opportunity of incorporating different belongings or methods to mitigate threat.
Truth: Whereas Bitcoin ETFs monitor the worth of Bitcoin, their volatility might be totally different resulting from elements like administration charges and monitoring errors.
Discover out extra concerning the misconceptions surrounding Bitcoin ETFs in Cointelegraph’s new YouTube video, Legends & Myths about Bitcoin ETFs Debunked.
