The last time a bitcoin ETF was launched, the price of bitcoin jumped 82% in a month and it could do it again very soon. Bitcoin funds are coming and we could see a bitcoin futures ETF within the next month…but should you buy? Get up to $250 in free bitcoin when you open an account on BlockFi https://mystockmarketbasics.com/blockfi
There is no stopping the launch of a bitcoin ETF. There’s already one in Canada with the Purpose Bitcoin ETF (BTCC) and the demand in the U.S. is building. The SEC and Chair Gensler have been dragging their feet but recently gave the clear go-ahead for a bitcoin futures ETF. It’s not what bitcoin investors were hoping for but it is a start…but is it a good investment?
In this video, I’ll show you how bitcoin ETFs work and how a bitcoin futures fund is different. I’ll explain the pros and cons of ETF investing and whether you should invest in a bitcoin fund or the cryptocurrency itself.
There have been more than 20 filings for a bitcoin ETF in the first eight months alone and new ones announced weekly. The government has delayed or denied every one so far but recent testimony opens the door for approval within the next few months.
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Pros of a bitcoin ETF are that it would open the investment up to millions of people still skeptical of crypto exchanges. It would also be a way to safely invest in bitcoin without having to store your own wallet or worry about a hack of your assets. The ETF provider would store all bitcoins in a cold storage wallet, safe from hacking or loss. A bitcoin ETF would also allow investors to buy bitcoin from any brokerage account and through a retirement portfolio.
Cons of a bitcoin ETF are the additional costs for management, as high as 1% annually in some cases. It also might not track the price of bitcoin perfectly in the case of a futures ETF or because of management error.
A bitcoin futures ETF would be different in that it wouldn’t hold bitcoin but would invest regularly in futures contracts on the CME. That will mean higher costs because the contracts have to be rolled over regularly. It will still affect the price of bitcoin though because the additional buying will bring arbitrageurs that will take the other side, selling bitcoin futures and then simultaneously buying bitcoin to close any pricing gap. So it doesn’t matter quite as much whether a bitcoin ETF or futures fund is launched, the price of bitcoin will still increase.
There are a lot of benefits to a bitcoin ETF and it will be the better option for many investors. I prefer to buy the bitcoin itself though to save on fees and get that direct investment on the price. An ETF will track the price of bitcoin but not always perfectly.
Still not investing in cryptocurrency? Don’t miss the rest of the videos in our cryptocurrency tutorial series for beginners!
Two ways to value bitcoin and why it could go to $190,000 in a few years! https://youtu.be/hrTVtv-caiE
Price forecasts for 7 other cryptocurrencies including Ethereum, Litecoin and Stablecoins https://youtu.be/8IYNyn-QB_M
Bitcoin vs Ethereum: Which is the Better Investment? https://youtu.be/UWgWcsA8dSQ
0:00 Bitcoin ETF Explained
1:44 How Bitcoin ETFs Work
2:07 Pros and Cons of a Bitcoin ETF
4:20 How Bitcoin ETFs will Drive Bitcoin Prices
6:01 ETFs vs a Bitcoin Futures ETF
6:51 Should You Invest in a Bitcoin ETF?
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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.