What İs The Bitcoin Exchange Mutual Fund “Bitcoin ETF” ?

It seems inevitable that two of the hottest areas of the investment world will meet sooner or later. A Bitcoin ETF is a great opportunity for investors who want to take advantage of the growing popularity of stock exchange mutual funds (ETFs). However, many problems were faced while trying to launch the first Bitcoin ETFs. This is because Bitcoin, the largest crypto currency in the world, remains largely uncontrolled, and the US Securities and Exchange Commission (SEC) is hesitating to allow ETF to focus on the new and largely untested crypto currency market.

How Does a Bitcoin ETF Work?

Before looking at the potential benefits and risks of a bitcoin ETF, let's go a step back and see what a Bitcoin ETF is.

ETF is an investment instrument that monitors the performance of a particular asset or group of assets. ETFs enable investors to diversify their investments without having assets tracked by ETF. For people who only want to focus on earnings and losses, ETFs provide a simpler alternative to buying and selling individual assets. In addition, many traditional ETFs enable investors to diversify their businesses easily, as they target larger investment baskets with something in common, such as stocks representing the video game industry and related businesses.

A Bitcoin ETF is something that mimics the price of the most popular digital currency in the world. This allows traders to buy into ETF without going through the complicated Bitcoin trading process. Moreover, ETF owners do not have to worry about the complex storage and security procedures that crypto currency investors need because they cannot invest directly in Bitcoin.

Why not just invest in Bitcoin?

If a Bitcoin ETF only reflects the price of the crypto currency, why bother with the middle man? Why not invest directly in Bitcoin? There are several reasons for this. First, as mentioned above, investors do not have to deal with security procedures related to Bitcoin and other crypto currencies. In addition, there is no need to deal with crypto currency exchanges in the process: Investors can buy and sell ETF through traditional exchanges and markets.

There is another important benefit to focusing on a Bitcoin ETF rather than Bitcoin itself. Since ETF is an investment instrument, investors can short-sell ETF's shares if they believe that the Bitcoin price will fall in the future. This is not something that can be done in the traditional crypto currency market.

Even though crypto coins and tokens have become increasingly popular in recent years, perhaps most importantly, ETFs are better understood in the investment world than crypto currencies. An investor who wants to take part in the crypto currency field but does not have the time to learn about all the inputs and outputs can focus on buying and selling a vehicle that is likely to have a better understanding.

Road to Bitcoin ETF Approval

Companies that want to launch Bitcoin ETFs have had a difficult time with regulatory agencies so far. Cameron and Tyler Winklevoss, who are among the investors of major companies like Facebook, also run a crypto money exchange named Gemini. In 2017, they wanted to launch a Bitcoin ETF called Winklevoss Bitcoin Trust. Their applications were rejected by the SEC. The SEC's rejection of the application was due to the fact that Bitcoin was traded on largely unregulated exchanges and was open to manipulations and deception. The Winklevoss brothers, however, did not abandon their efforts. On June 19, 2018, the US Patent and Trademark Office granted them a patent for a company named Winklevoss IP LLP for listed products.

The Winklevoss brothers are not the only crypto-currency enthusiasts who think they will be the first to successfully launch a Bitcoin ETF. Cboe Global Markets, Inc., the stock exchange responsible for the execution of Bitcoin futures. (CBOE) hopes that the SEC will also allow ETFs for the crypto currency. Cboe also acquired Bats Global Markets, Inc., the stock exchange where the Winklevoss brothers were offered the ETF.

VanEck and SolidX, a fintech company with Bitcoin-related projects, announced plans for the Bitcoin Trust ETF (XBTC) in 2018. This ETF will target institutional investors to be opened with a stock price of $ 200,000 according to ETF Trends. XBTC was designed to track an index of a group of Bitcoin trading desks. The idea is that the ETF could broaden its focus a bit to alleviate XBTC's concerns about SEC's funds associated with Bitcoin.

Jan van Eck, the CEO of VanEck, believes they can do something better than other structures that are currently in the process of editing. A suitably structured physically supported Bitcoin ETF will be designed to expose the Bitcoin price, and an insurance component will help protect shareholders against Bitcoin procurement and operating risks.


Investors continue to be optimistic, although the SEC has so far not approved any ETF of crypto currency. A source in the Commodity Futures Trade Commission said that the likelihood of a Bitcoin ETF being approved is extremely high.

The SEC also opened Bitcoin ETF applications to the public's comments, and the majority of commentators expressed approval for the new product. When the first Bitcoin ETFs are launched, both crypto currency enthusiasts and traditional investors are likely to see early success. In contrast, the rise of Bitcoin ETFs may help increase Bitcoin price, and as many other crypto currencies are closely linked to Bitcoin performance, the crypto currency market in general may negotiate an uptrend.

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