DeutschIn the USA, the Bitcoin ETF was launched on October 19, 2021. In the meantime, other ETFs have followed. Investors reacted particularly positively to the news, so that Bitcoin finally scratched the 67,000 US dollar mark in October, setting a new all-time high.
Nevertheless, many people are wondering what the point of a Bitcoin ETF is. Therefore, in this article, we will go into the details of a Bitcoin ETF and examine the advantages and disadvantages it entails.
Are Real Bitcoins Deposited in Bitcoin ETFs?
The ETFs from the USA do not have any real Bitcoins deposited. Instead, they hold Bitcoin futures contracts and, in some cases, the shares of companies and other ETFs that are active in the field of cryptocurrencies. The reason for this is the concern of the US Securities and Exchange Commission (SEC) that real BTC are traded on unregulated crypto exchanges. SEC Chairman Gary Gensler has stated that, given the novel nature of cryptocurrencies, confidence in the proven and highly regulated futures market is a much safer approach for exchange-traded Bitcoin funds.
What is the Benefit of a Bitcoin ETF?
If you want to invest in cryptocurrencies, there are many aspects to consider in advance. Choosing the right exchange or broker is crucial. Above all, the point of custody presents many investors with difficulties. Many crypto exchanges are not yet regulated in the DACH region, so there is no deposit insurance.
Not all exchanges are regulated in the USA either. This is precisely why the first Bitcoin ETF in the country on a futures basis was celebrated so much in October. This gives citizens the opportunity to participate in the performance of Bitcoin through their local bank without holding it directly.
Although this means that the main tasks of Bitcoin are lost – namely, being able to be used as a means of payment – it also opens up a new market. People who did not want to invest in cryptocurrencies due to the lack of regulation can now easily invest in Bitcoin. Of course, advantages such as anonymity (Bitcoin is only pseudo-anonymous anyway) and decentralization are also lost in this aspect.
Does a Bitcoin ETF Have Risks?
As positive as the Bitcoin ETF has been received, the investment product itself naturally also carries risks. On the one hand, there is the normal trading risk for people who speculate with Bitcoin. A loss in value of the cryptocurrency also affects the ETF. Bitcoin ETFs represent access or the bridge to the mass market. In particular, conservative investors trust their local bank more than a crypto exchange that has only been on the market for five years. This is perfectly understandable.
Another risk in this case is that the profits may not be as high as with the normal purchase of Bitcoin on a crypto exchange. This is because the fees for an ETF are charged annually, even if only very low fees are charged. On the other hand, there are no costs involved in holding real Bitcoins.
In which Countries are Bitcoin ETFs Already Available?
In addition to Canada, Brazil in particular has provided good news in the past for investors who want to invest in crypto ETFs. There is even an Ethereum ETF in Brazil. The USA is currently still a long way from this, as normal Bitcoin ETFs will probably not receive approval for some time.
