Sat, Jan 13
In one of my recent articles, I addressed the issue of the Bitcoin ETF and mentioned that the price of the current asset could both appreciate and depreciate from the price at which it was being traded in the market.
One of the reasons for the devaluation is the simple fact that there would be a lot of "game" in the market to buy the asset cheaper for the creation of more Investment Funds or corporations, which are responsible for maintenance and management of ETF's, earning billion-dollar profits while investors trade shares in the market but without necessarily owning any Bitcoin. In other words, investors don't need to possess Bitcoin to trade shares since the fund does that, and they make money from the Bitcoin trading by buying cheap and selling at a higher price on regulated exchanges for that purpose.
Let the Investment Fund stress out to keep their Bitcoins secure, you just buy ETFs relax on a Beach and everything will be cool
Many still don't truly understand how a Bitcoin ETF works, and in this article, I will ensure that this doubt disappears, or better, that even uneducated people can understand how an ETF works.
Well, a Bitcoin ETF (Exchange Traded Fund) is a form of investment in which people who want to make money from the exposure to the Bitcoin price movement decide to invest in shares managed by Bitcoin investment funds (like Grayscale), thereby earning profits. Investors do not need to access Bitcoin directly, leaving this task to the investment funds.
In other words, the ETF is a financial product that follows the price of Bitcoin in the market, allowing investors to have exposure to the Bitcoin price movement without necessarily possessing Bitcoin.
Here we can use the example of a Bitcoin ETF called BTCX, managed by a professional financial team or institution that buys real Bitcoin and creates a fund linked to the Bitcoin price. Here, investors can buy shares using an accredited exchange for that purpose, and based on the daily fluctuations of the Bitcoin price, they can make profits.
Make your ETF profits from the Market Up and Down on the Bitcoin Price after all you dont own any!!
The value of this BTCX share is designed to closely follow the actual Bitcoin price in the cryptocurrency market. If, for example, the Bitcoin price rises or falls, the price of BTCX also follows this movement. BTCX, as I mentioned earlier, is traded on accredited exchanges with high liquidity. The fund managers charge, without a doubt, management fees corresponding to a percentage of the fund's net assets.
This fee charged is important to cover the operating costs of the Bitcoin ETF, which includes, among various measures, the security of Bitcoin to avoid it falling into the hands of cyber thieves. Investors can enjoy an investment in Bitcoin without owning it, and make profits by selling BTCX shares at a higher price than they bought them.
In other words, investors can have Bitcoin in their portfolio without having to deal with the bureaucracy of dealing with exchanges, digital wallets, or worrying about the security related to the direct possession of Bitcoin, leaving everything in the hands of the investment fund team. The investment fund also has the task of complying with the law and required regulations, ensuring a level of security and legitimacy for investors.
When you enjoy your ETF in a paradise island, the Investment Fund must keep regulators happy and secure Bitcoins on their vault. What a big deal for you...or not!!
Therefore, people who invest in BTCX simplify their investment in Bitcoin where they can invest and trade shares representing Bitcoin in a regulated environment, with high liquidity, and ease of trading shares. I hope to have cleared up doubts regarding the Bitcoin ETF and that more people can understand what it is and how it works.
Have an excellent Saturday, and don't forget to share as well as send incentives (those tips do wonders for my Ego🤑) and provide motivation to continue bringing more articles about the current crypto ecosystem.