Bitcoin ETFs: What They Are, Listing and How to Invest

ETFs, (Exchange-Traded Funds) are a form of investment with low fees and low management expenses listed on an exchange like regular stocks. ETFs often replicate the performance of a stock, bond or commodity index. They are now also being developed in the world of cryptocurrencies. In fact, there are investment funds that focus on investing in infrastructure and software specific to the blockchain or related materials. Then there are ETFs that are properly concerned with a single well-defined cryptocurrency, such as Bitcoin, or cryptocurrency conglomerates. These are young and still not very popular instruments, but they aim to bring as many investors as possible into this diverse and highly promising world.

What are Bitcoin ETFs

Within the ETFs dedicated to a specific cryptocurrency, we recognize a different functioning than the “traditional” ETFs. Their operation consists of an accumulation of the interest created by investors with the purchase of the shares of the ETF and, through that capital, subsequently, the managers, will proceed to an active purchase in the underlying market. The funds invest the entire proceeds from the sale of their shares and retain a useful percentage to meet management fees and profit.

The Bitcoin ETF thus becomes a financial instrument that offers traders the opportunity to gain exposure to a particular asset without purchasing it directly. They are differentiated into physical ETFs or Futures ETFs (described further below).

How to invest in ETFs

To invest in ETFs there are various solutions suitable for every pocket and every level of experience. You can rely on a traditional bank, but be careful that the high management fees and commissions do not take away too high a percentage of our possible profit margin. The best solution is to use an online broker. The commissions are very competitive and there are no compromises in terms of security. Many of these platforms also offer even greater advantages for investing in ETFs by eliminating management fees and reaching commissions close to 0%.

Among the possible solutions offered by the market, we have eToro. eToro is a platform that has been active for years with millions of registered and active users. It offers a high selection of ETFs, obviously also Bitcoin ETFs and ETFs belonging to the crypto world. Among its functionalities and features we find a blog managed by a sparkling community and the uncommon features of CopyTrading and PopularInvestor. Leading company in the industry offers commissions among the lowest in circulation. Through the dedicated app, buying and selling and periodic monitoring of the portfolio becomes simple and fast. eToro, regulated by Cysec, an institution of the European Union, is safe, reliable and controlled.

The Best Bitcoin ETFs: Pricing and Features

Bitcoin ETFs are divided into Physical ETFs and ETFs on Future contracts. The Physical ETF operates by directly purchasing the underlying asset that is Bitcoin. The Future ETF instead operates through the purchase and sale of derivatives. It does not physically hold Bitcoin but operates, for example, on futures contracts. 

The best Bitcoin futures ETF

Among the best ETFs available in our country, we certainly find the first bitcoin ETF regulated and accepted by the SEC, namely ProShares Bitcoin Strategy ETF (BITO). It is a fund that faithfully replicates the performance of Bitcoin but does not hold them. It is in fact a Futures ETF. It is listed on the NYSE, American Stock Exchange in New York and can be purchased through major online brokers.

The best physical Bitcoin ETF

The BTCetc – ETC Group Physical Bitcoin is a physical ETF that faithfully replicates the performance of the underlying cryptocurrency. You need to mention it in any Bitcoin ETF guide because it is the world’s largest fund on Bitcoin in terms of liquidity. It is listed on all major European and global exchanges and can therefore be found and purchased through most online brokers.

Best Alternative: VanEck Vectors Bitcoin

VanEck is certainly, in the world of ETFs and investments in general, synonymous with reliability and security, one of the leading companies in the world. Over the years, it has spawned some of the best investment funds still operating in history. Together with companies of the calibre of Invesco, Vanguard, iShares and BlackRock, it ensures that its products are a guarantee. The ETF results in the top of the most capitalized globally. It has a particular operation that leads the fund to replicate the performance of Bitcoin through the purchase of a bond backed by debt securities, secured by the physical possession of Bitcoin. Buying such an ETF is also possible on major platforms.

Advantages and Risks of Investment

The advantage that sometimes leads us to purchase an ETF instead of the real digital currency lies in the simplicity of management and purchase of these products as well as their cost-effectiveness. They are traded in the same way as any share on the main stock exchanges. These instruments also offer greater protection and control to investors as they are regulated solutions in the various jurisdictions.

Like any other asset in the market, they have implicit risks such as market unpredictability or human error. Bitcoin ETFs are also risky because of the unpredictability of the value trend that a currency like Bitcoin has accustomed us to over the years. Prudence and analysis are necessary always and in every investment.

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