There are various products in the market for investors that can help them participate in the new-age asset and brace volatility.
Exchange-traded funds (ETFs) are one such product that track a particular index, sector, stock, commodity or any other assets to bring the best of both worlds.
Bitcoin ETFs were introduced in October 2021 and attracted a large chunk of investors who did not want the hassle of storing the tokens in hot or cold wallets.
Bitcoin ETFs are actively traded on the New York Stock Exchange Acra network. Investors can buy BITO shares through a brokerage or directly from ProShares. BITO is the largest actively managed Bitcoin ETFs so far.Why Bitcoin ETFs?
This is a passive form of investment, where investors mostly do not have to worry about short-term fluctuations and put their money in a particular asset for the longer run. Even during volatility, they tend to make the most of it by averaging their cost.Mohammed Roshan, CEO & Co-founder of GoSats said passive crypto investments are a good idea, and a great way to achieve one’s financial goals but only if investors stick to strong names, which have proven their reliability and value.Gaurav Dahake, CEO & Founder, Bitbns said Bitcoin ETFs are stress-free form of investment as they allow them to stay invested for an extended period and make the most from their investment.
Who should choose it?
Market experts suggest that new and novice investors, who have low-risk appetite and those who don’t wish to own crypto directly or cannot track the markets frequently, should enter the crypto space through Bitcoin ETFs.
“ETFs are a great way for institutions and corporations to invest into Bitcoin, while the regulation around crypto is still hazy,” said Roshan.
In addition to it, Dahake believes that an investor who is not worried about short-term market sentiments, or one looking for portfolio diversification in high return asset class in the longer run can look at it, instead of buying Bitcoin directly.
Time horizon and approach?
Crypto investments are long-term and require deep and thorough research. Short-term investments may lead to disappointment and loss of rewards.
An investor delving into Crypto ETF must choose a prominent and legitimate one based on its market capitalization and understand the token’s holistic purpose for which it was developed, Dahake from BitBns advised.
Limitations
The actual crypto market is a 24×7 phenomenon which runs 365 days but ETFs might have restrictions over trading hours. Furthermore, ETFs, being less riskier than actual cryptos may have a higher free structure. ETFs are available for select tokens only.
Bitcoin ETFs on stock exchanges are only open during market hours, Roshan from GoSats highlighted. “Bitcoin is at a very nascent stage and it’s not suitable for the investors who plan to exit on a knee-jerk reaction.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)