There are many different items available on the market for investors to purchase that can assist them in protecting themselves against volatility and participating in new types of assets.
Exchange-traded funds, often known as ETFs, are one such product that track a certain index, sector, stock, commodity, or any other assets in order to bring the benefits of both worlds together in a single investment vehicle.
The first exchange-traded funds (ETFs) for bitcoin were launched in October 2021, and they quickly drew a significant number of investors who did not want the trouble of holding the tokens in either hot or cold wallets.
Bitcoin exchange-traded funds (ETFs) are actively traded on the Acra network of the New York Stock Exchange. BITO shares are available for purchase by investors either through a brokerage or directly from ProShares. BITO is now the Bitcoin exchange-traded fund (ETF) with the biggest amount of active management.
Why Do You Need Bitcoin ETFs?
This type of investment is known as a passive form of investing since the investor often is not required to worry about changes in the near term and instead invests their money for the longer term in a certain asset. Even when market conditions are volatile, they typically make the most of the situation by averaging their costs.
Passive cryptocurrency investments are a good idea, and a great way to achieve one's financial goals, according to Mohammed Roshan, CEO and Co-founder of GoSats. However, investors must stick to strong names that have proven their reliability and value in order to reap the benefits of these investments.
Bitcoin exchange-traded funds (ETFs), according to Gaurav Dahake, CEO and Founder of Bitbns, are a stress-free type of investment since they enable investors to remain involved for longer periods of time and get the most out of their investments.
Who should make the decision?
Experts in the financial markets recommend that new and inexperienced investors, as well as those with a low appetite for risk and those who do not wish to own cryptocurrency directly or who are unable to track the markets frequently, enter the cryptocurrency space through the purchase of Bitcoin ETFs.
"ETFs are a wonderful method for institutions and businesses to invest in Bitcoin, while the regulation around crypto is still foggy," said Roshan. "While the regulation is still hazy, ETFs are a great way for institutions and corporations to invest in Bitcoin."
In addition to this, according to Dahake, an investor who is not concerned about short-term market sentiments or who is looking for portfolio diversification in a high return asset class in the longer run may want to consider it as an alternative to buying Bitcoin directly. This is because Dahake believes that in the long run, the price of Bitcoin will continue to rise.
What is the time frame and the strategy?
Investing in cryptocurrencies is a long-term strategy that requires extensive and in-depth research. Investing for the short term might result in frustration and the forfeiture of potential gains.
According to Dahake, who works at BitBns, an investor who is interested in cryptocurrency exchange-traded funds (ETFs) should choose a popular and credible ETF based on its market size and grasp the token's holistic goal for which it was developed.
The actual cryptocurrency market is a phenomenon that operates 365 days a year, 24 hours a day; however, trading hours for ETFs may be restricted in some cases. In addition, exchange-traded funds (ETFs), which are less volatile than genuine cryptocurrencies, might have a higher degree of freedom. ETFs are only available for a limited number of tokens.
Roshan from GoSats brought to our attention that Bitcoin ETFs traded on stock exchanges are only available for trading during market hours. "Bitcoin is at a very nascent stage, and it is not ideal for the investors who aim to quit on a knee-jerk reaction."