A bitcoin exchange-traded fund (ETF) allows buyers to invest in bitcoins without buying the actual asset. This investment method allows users to avoid having to register on an exchange or use cryptocurrency wallets.
In traditional investing, an ETF is a form of investment that tracks the price of an asset or group of assets. ETFs are an easy way to invest in multiple assets simultaneously without actually owning those assets.
What is a Bitcoin ETF?
In the case of bitcoin, a bitcoin ETF is an asset that simply tracks the price of bitcoin. By investing in a Bitcoin ETF, users can still enjoy Bitcoin gains without going through the Bitcoin acquisition process.
What is a BTC futures ETF?
A Bitcoin futures ETF offers users the ability to bet on the price of bitcoin, agreeing to buy or sell bitcoin at a specific price on a specific date.
A BTC futures ETF is a contract in which you agree to buy or sell bitcoins at a specific price on a predetermined date. For example, buying through the ProShares Bitcoin Strategy ETF, an investor could create a contract with ProShares to buy $10,000 in bitcoins on June 15, regardless of the actual value of bitcoins on that date.
How does a spot BTC ETF work?
A bitcoin spot ETF offers the same streamlined investing capabilities as a bitcoin futures ETF, but it only allows users to invest at the spot price of bitcoin rather than a future value.
A spot Bitcoin ETF has all the advantages of a futures ETF, such as investing in bitcoin without going through an exchange, paying less fees than on a cryptocurrency exchange, and streamlining the whole process . But a spot ETF invests in bitcoin on-site, which means buyers hold bitcoin in their contracts.
The Struggle for a Bitcoin Spot ETF (or Bitcoin Spot ETF)
The Bitcoin spot ETF does not yet exist, but may well become a reality by 2023 . Cryptocurrency companies have offered various concepts to the United States Securities and Exchange Commission ( SEC ) over the years, but the SEC has yet to relent despite its two recent allegedly “crypto-positive” chairmen.
For example, Jay Clayton, who led the SEC from May 4, 2017 to December 23, 2020, is a fan of bitcoin as a store of value. However, no proposition convinced Clayton on the BTC ETF. Clayton’s successor, Gary Gensler, endorsed ProShares BITO.
Other ETF proposals, including those from Valkyrie and Van Eck, have also been approved. That said, one company, Grayscale, may be the first to implement a bitcoin spot ETF.
Grayscale offered its spot BTC ETF to the SEC in 2016. In March 2022 and after a long battle with the regulator, Grayscale remains committed to obtaining the necessary clearance and bringing the Bitcoin spot ETFs. She will go so far as to threaten to sue the SEC if her latest attempts are unsuccessful. For its part, the SEC says its biggest fear is that the bitcoin spot ETF will be used to manipulate the market.
Are spot BTC ETFs better than futures?
BTC spot ETFs and BTC futures ETFs both have their pros and cons.
While spot Bitcoin ETFs are certainly more “legitimate” than forward Bitcoin ETFs since they involve the actual purchase of bitcoins, it’s hard to say which is better.
After all, a Bitcoin futures ETF may not involve buying at the price of bitcoin, but it streamlines the buying process and allows investors to bet on the market whether they choose to sell it short. or not.
Conversely, a bitcoin spot ETF, according to many bitcoin enthusiasts, will bring “legitimacy” to the asset, as it will allow users to invest in bitcoin without actually owning it – and at the actual price of the bitcoin. bitcoins.
How many BTC ETFs are there?
Several companies offer BTC ETFs, and each is available on its own exchange.
The only BTC ETFs in existence are Bitcoin futures ETFs, and we have already mentioned the ProShares BITO Bitcoin futures ETF, which currently holds around $1 billion in investments. BITO is listed on the Chicago Mercantile Exchange (CME).
Another BTC ETF is the Valkyrie Bitcoin Strategy ETF. Also offering Bitcoin futures ETFs, Valkyrie is listed on the Nasdaq under the ticker BTF. Next, we have the VanEck Bitcoin Strategy ETF. Offering users exposure to Bitcoin futures ETFs, the VanEck Bitcoin Strategy ETF is listed on the CBOE exchange with the ticker XBTF.
There are several other BTC ETFs on the market, but the ones mentioned above are some of the most popular. It is of course up to the user to choose the ETF that suits him best.
