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Introduction:
Bitcoin ETF is an alternative to buying cryptocurrency that many have been waiting for a long time. ETF (eng. exchange-traded funds), i.e. index fund, is seen in many ways as a more stable investment target. Even though it is tied to the volatile cryptocurrency, i.e. Bitcoin. The Bitcoin ETF has had to travel a very long and winding road. Because while cryptocurrencies are unregulated but legal investments, ETFs are regulated investments. How can Bitcoin, which is outside of all regulation, be turned into an ETF in this situation?
If all this wasn’t complicated enough, there might also be people behind the screen for whom both Bitcoin and ETF are completely foreign concepts. However, the emergency does not look like this! This article was created precisely so that the Bitcoin ETF would open up in plain language both to those who invest as a profession and to those who are just considering starting to invest. We go through what a Bitcoin ETF is, where it came from, and what sense it makes to invest in an ETF once you can directly buy Bitcoin. In addition, we offer a Buy Bitcoin ETF guide that will help you participate in the patterns below the time unit.
Why should you invest in a Bitcoin ETF?
- Bitcoin still makes many investors suspicious, but through the ETF it becomes a regulated investment. Which is more stable than cryptocurrency
- Even if the price of Bitcoin fell, its fall would not be reflected so radically in the price of the ETF
- The Bitcoin ETF remains safe in your investment portfolio. While when buying Bitcoin it is recommended that you deposit them in a separate crypto wallet, i.e. Wallet
- ETFs are a well-known and trusted target asset in the investment market. While Bitcoin is still an unknown and uncertain investment target for many
Best trading platforms to buy ETF and Bitcoin ETF 2023:
With ETFs on your shopping list, you first need to find yourself a good trading platform to invest through. Important things to consider when choosing a platform are of course their user-friendliness and safety. And when you add to this the fact that Bitcoin is a digital currency, your only option is to invest on versatile online trading platforms. Buy Bitcoin ETF from reliable trading services on the internet that allow you to invest without extra fees or cumbersome intermediaries. These are the best trading platforms on the market right now:
- eToro – An easy-to-use, versatile and reliable trading platform where you can invest cannabis in stocks, cryptos, commodities and funds.
- Libertex – a service focused on CFD trading, suitable for active investors with a higher risk tolerance.
- Skilling – A trading platform specializing in active CFD and Forex trading.
Investing through banks in general is slow, rigid, limited and very expensive. So why waste time and money when you can alternatively start investing yourself, without intermediaries, directly from your home couch? From the platforms mentioned above, you get all the tools you need for investing, and in addition, you have at your disposal a significantly wider, international selection of investment targets. These platforms are better equipped to guarantee the safety of your funds than banks. For example, eToro’s trading platform offers an excellent selection of investment targets, including Finnish stocks.
Of course, trading platforms also have their own mobile applications, where your investment portfolio goes with you every day. The aforementioned platforms invest in the security of your money and your information on a completely different level than banks, because they recognize that online services attract all kinds of scammers. Although it sounds unbelievable, you invest more safely online than in your bank. Buy Bitcoin ETF easily and safely online.
What is a Bitcoin ETF?
The Bitcoin ETF is a peculiar phenomenon in many ways. First of all, what makes it special is that two completely different types of investment meet each other: Bitcoin is a digital currency that is not subject to any kind of regulation, while ETFs are assets that are subject to all traditional investment regulations. Secondly, the forms of their existence are very different from each other.
ETFs are exchange-listed funds, i.e. indexes that track a specific business sector or the entire market. For example, the world’s largest S&P 500 index tracks the 500 largest US stock companies and bundles them into one index in which you can also invest. ETFs are thus under the control of traditional financial markets, and their movements on the price table are most influenced by the movement of the sector or market in question.
Bitcoin, on the other hand, is based on decentralized, public ledgers called blockchains. Bitcoin’s blockchain has no centralized governance, and Bitcoin has no physical form. While the value of the fiat currencies in your wallet goes down all the time, the value of Bitcoin goes up in huge spurts at certain intervals. Instead of the state of the economy, the value of Bitcoin is influenced by the increase in the amount of its use, its exclusivity, its mining, and something as simple as trending on social media.
Is Bitcoin ETF Practically Possible?
Bitcoin entered the market in 2009, and since then it has resolutely invaded the grounds of traditional financial markets. However, its introduction as a payment currency on the consumer side has been slowed down by the contradiction. Of its non-centrally controlled technology with highly centralized and undemocratic financial markets. However, this has not stopped those who believe that Bitcoin has the full potential. To revolutionize the economy as we know it today by becoming a global currency. And one excellent way, according to them, would be to combine Bitcoin and exchange-traded funds. Thereby bringing Bitcoin to the traditional market.
This idea has had solid support in the crypto market for a long time. But for the parties running traditional financial markets, such a decentralized, out-of-control asset still causes headaches. So far, the money crunch has served as an excellent reason to try to slow down the progress of Bitcoin by all means. But now that Bitcoin is already seen as a more valuable asset than gold. The opinions of these parties running the market are also starting to dilute. Are we still in completely safe waters? Not really, but in just one year, the Bitcoin ETF has started to look more like a likely investment than just a pipe dream.
Bitcoin’s lack of regulation:
The highest fence that the Bitcoi ETF has had to cross is precisely Bitcoin’s lack of regulation. But now there is light at the end of the tunnel. If and when a Bitcoin ETF appears on the market, it would practically be an index that specifically follows the development of the price of Bitcoin. So it is not an index that follows the entire crypto market. That is, when you buy a Bitcoin ETF, you do not invest directly in Bitcoin. But you benefit from its price increase. At the same time, you can sort of bypass its worst volatility, which practically means that its price drops won’t hit your wallet quite so drastically. In the big picture, a Bitcoin ETF could also bring it within reach of investors who have so far shunned cryptocurrencies from afar.
Should You Buy Bitcoin or Bitcoin ETF?
Whether you should buy Bitcoin directly or a Bitcoin ETF depends on the type of assets you are willing to invest in. Research your investment strategy, and think about which of the two would be the most potential option for you. Or you can proceed with the ‘both are better’ method and invest in both.
Investing directly in Bitcoin gives you direct access to its huge price jumps, but at the same time you have to withstand its volatility. Instead, a Bitcoin ETF allows you to invest in a regulated Bitcoin asset, which for many means stability. In addition, through the ETF, you can trade on a traditional stock exchange instead of a crypto exchange. Trading with Bitcoin requires a bit of familiarization, because due to its different nature, it obviously doesn’t work in traditional ways. Bitcoin ETF therefore offers an easier and more stable alternative.
Good reasons to buy Bitcoin:
- When the price of Bitcoin bounces, it instantly makes those who invested in it very rich, which is not possible with many other investments
- Bitcoin is already used as a currency in many online stores, and you can even get a Bitcoin credit card from Visa
- The value of Bitcoin will probably continue to rise well into the future
- Bitcoin is the most stable, well-known and easily accessible alternative among cryptocurrencies
Good reasons to buy a Bitcoin ETF:
- The ETF binds Bitcoin to the regulation of traditional financial markets, which in the eyes of many creates stability for it
- As an investment, Bitcoin ETF is more stable in terms of price changes than Bitcoin itself
- With Bitcoin ETF, you can trade on traditional exchanges
- Trading ETFs is significantly easier than trading Bitcoin
Beginner’s Guide: Buy Bitcoin ETF 2023 Easily
In the past couple of years, cryptocurrencies have established their place on the money market, and even those who still doubted their potential to spread to general use in 2019 have had to swallow their pride. Cryptocurrencies are here to stay and their uses are expanding rapidly. Bitcoin ETF is an easier and safer way to invest in this world’s largest cryptocurrency, because by investing in it you are not directly investing in a volatile cryptocurrency. Is the thought “Buy a Bitcoin ETF” already creeping into your mind?
Now is a good time to get involved in new markets, before the rates of cryptocurrencies rise exponentially. Buy Bitcoin ETF only from reliable and secure online trading platforms. Important things to consider in platforms are ease of use, and especially their security. With this quick and easy beginner’s guide, you’ll be involved in the world of cryptocurrencies in less than a minute. How to buy a Bitcoin ETF:
Step 1 – Choose the right trading platform
When you start investing, make sure that the service you choose is the best possible for you. Of course, you can invest through your own bank, but we recommend you the eToro trading site. eToro is one of the most internationally popular and largest trading platforms for both stock, commodity and index investing. eToro has made investing very easy and cheap, especially for beginners, and in addition, investing through it is versatile.
Investing in eToro is possible without paying commissions, and in addition, trading and investing in eToro has been made safe, as all money transfers are protected with SSL technology. Being a social trading platform, it comes with a community of investors from whom you can get first-hand investment tips that will give you a huge edge.
Step 2 – Create an account and deposit money
Start investing by registering and opening an account from the Register button on the eToro homepage. Once your eToro account is open, the next thing you need to do is transfer money to your new account. This must be done before you can start investing. eToro’s minimum transfer is only 200 euros and you can transfer money from your credit card, PayPal or direct bank transfer.
Once logged into your eToro account, you will see a Deposit Funds button in the lower left corner. Click on it. A form will open in front of you, choose the payment method you want, and enter the amount you want to transfer in the box. Finally, click ‘Send’ and the money will be transferred from your account to your eToro account. Now you are ready, ETF investing in eToro can begin!
Step 3 – Buy a Bitcoin ETF
Once you are logged in to your eToro account, search the search field at the top for the trading item you want to trade, such as Bitcoin ETF. On the investment site’s page, you will find useful news about the market and the movements of this stock in the market, statistics, as well as comments from the investor community on the subject.
At the top right of the page is the Trade button. Click on it, and the trading form will open for you. Enter the desired trading barometers on the form and open the trade by clicking the Open trade button.
How does a Bitcoin ETF affect the price of Bitcoin?
When you invest in a Bitcoin ETF, you should understand that you are not investing directly in Bitcoin. Instead, you invest in an index that tracks Bitcoin price trends over the long term. This monitoring of the price development takes place specifically through the development of the price of Bitcoin futures. Not directly by following the price of Bitcoin. In practice, this means that the Bitcoin ETF price does not correspond to the price of Bitcoin itself.
In terms of investing, this difference in the values of these two investment targets means. For example, that the Bitcoin ETF might in the big picture be better suited for active trading than Bitcoin itself. This has been seen to be because, as a futures-based underlying asset.The Bitcoin ETF would be easier to trade when the price is high or low.
On the income side, however, the sled easily turns in the other direction: experts believe that by investing directly in Bitcoin. The investor can benefit more from its price increase in the long term. So which would actually be a better option? It is up to the investor to decide.
At the end of the day, it can be said for sure that the Bitcoin ETF is well suited for investors. Who are hesitant to invest directly in cryptocurrencies precisely because of their lack of regulation and volatility. The ETF makes it possible to circumvent these two uncertainties by providing a regulated index based on Bitcoin futures. In addition, the Bitcoin ETF is an easier investment, because instead of an investment portfolio. A separate, digital wallet is not needed to store it. But if your risk tolerance can handle it. A direct investment in Bitcoin can be a very profitable decision in the long run. So consider it carefully.
Where did Bitcoin ETFs originate?
Bitcoin ETFs are actually not a new thing, but different types of Bitcoin ETFs have been registered since 2013. However, the obstacle in front of all of these has always been the fact that Bitcoin, as a cryptocurrency. Is an unregulated investment and is too big a piece for financial market regulators to crack. Most Bitcoin ETF initiatives have been launched in the United States and Canada. Where their market entry has been blocked by the Securities and Exchange Commission (SEC).
The SEC considers that since cryptocurrencies cannot be regulated by it, it is not justified to offer them to consumers. In practice, the SEC therefore does not trust that consumers can be responsible for their own money. And as long as it relies on this, the Bitcoin ETF will remain in line behind the gate. This has been known from the beginning, but nothing great was ever achieved by giving up at the very beginning. Of course, well-known crypto investors, the Winklevoss twins. Who are said to have created the first truly viable Bitcoin ETF, the Winklevoss Bitcoin Trust, were also aware of it in 2017. The SEC rejected their ETF application right from the start.
Justification for rejecting the various Bitcoin ETFs:
The most common justification for rejecting the various Bitcoin ETFs is always the same: Bitcoin is traded on an unregulated. Digital market where investor funds can be exposed to scams and fraud. What is special about these arguments is that this same “problem” also applies to all investment targets covered by the regulation. But as we know, persistence often pays off, and in 2018, the Winklevoss twins’ persistence paid off: their company. Winklevoss IP LLP, received approval from the US Patent and Trademark Office.
As a result, it was possible to exchange the company’s products on the stock exchange. And since the Winklevoss twins are specifically known for investing in cryptocurrencies. It did not come as a surprise to anyone that cryptocurrencies were also found among these products. Of course, cryptocurrencies do not yet mean that a Bitcoin ETF will see the light of day. But this is how the twins got their foot firmly in the SEC’s door.
Light at the end of the Bitcoin ETF tunnel:
Thanks to some very cool influencers in the crypto market. In October 2021 the SEC was said to have finally approved the application for the ProShares Bitcoin Futures ETF. The SEC said that the change of heart was caused precisely by the fact that the application in question included the inclusion of futures. Through which, in their opinion, consumers’ money is more secure when investing. Futures are regulated assets, while a direct Bitcoin ETF is not. Which in the eyes of the SEC means that market manipulation through futures is less likely, and thus the investment is less risky.
So this still does not mean that the Bitcoin ETF is available to us. But the index in question follows the development of the value of Bitcoin futures. In practice, of course, it means considerable stability compared to Bitcoin. But at the same time the development of the value of futures is significantly more moderate than the development of the value of Bitcoin itself. In the eyes of many. However, this is only the first big step forward and closer to the genuine, real Bitcoin ETF.
Bitcoin ETF vs. Bitcoin ETN:
In the field of Bitcoin, investors already have a wide variety of options: direct investment in Bitcoin. Investing in Bitcoin futures, or in an index that follows these futures. In addition to all of these, there are ETNs, i.e. Exchange Traded Notes, i.e. loans listed on the stock exchange. ETNs are as easy an asset to trade as stocks, because they are traded in exactly the same way. And just like the value of stocks, the value of an ETN is also tied to the development of its underlying market, i.e. the value of a Bitcoin ETN would therefore be tied to the development of the value of Bitcoin.
ETNs bring the same breadth and versatility to the investment market as ETFs. As they allow investors to access a wide range of markets with just one investment. In addition, both ETFs and ETNs are able to offer the investor a positive return regardless of whether the market they follow is rising or falling. In the endgame, these two are very similar target assets, as both are broad-based. Cost-effective, flexible, and both enable diversification of the investment portfolio in one fell swoop.
The main difference between the two is that an ETN doesn’t give you ownership of the underlying asset you invest in. It just pays you the return it accrues. In addition, Bitcoin ETN is already one step ahead of ETFs, as it is already listed on. For example, Stockholm’s Nasdaq / OMX stock exchange and can be found on Bitcoin Tracker One. In practice, a Bitcoin ETN is a security that tracks the performance of Bitcoin in the market and can be traded in the same way as stocks.
Conclusion:
Bitcoin ETF is something that has been long awaited in the crypto market for years. Although efforts to bring Bitcoin ETFs to market have been accelerating for nearly a decade. They always run into a regulatory wall that has so far proven insurmountable. But in October 2021, the US regulator, the SEC, finally approved the “first phase” of a Bitcoin ETF, a futures-based Bitcoin ETF. This Bitcoin ETF therefore enables you to invest in an index that follows the development of the value of Bitcoin futures. Note, however, that the value development of futures. Does not match the value development of Bitcoin, especially at the volume level. This of course means more stable stability, but then you won’t be able to fully enjoy Bitcoin’s future price jumps.
