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BITO ETF: Everything you need to know

ETF

Source: The Cryptonomist

Over the past couple of years, the cryptocurrency world has witnessed a significant increase in growth and popularity and one of the major reasons for this to happen is the name that it has managed to make for itself on a global level. In simpler words, crypto is nothing but a decentralized blockchain-based platform that is extremely secure and user-friendly. Not just that, this digital asset of yours can easily be used for a series of purposes, one of which is buying and selling of goods and services, while also being capable of being used for the purpose of trade and exchange over crypto exchanges available online. 

Before moving on further, it is worth noting that, those of you who might be following crypto since its initial years, will agree with me on the fact that, when the industry was first introduced, there were not many currencies to choose from and frankly, not many investors were lining up to invest either, as not many of us knew about how it all operates back then along with the returns it offer. But, on the contrary, looking around today, it almost feels unreal to see numerous potential investors joining in each hour and several new currencies being introduced every day.

Seeing a lot of currencies available today, you should probably be aware of the fact that, not all currencies that are launched, make it to the mainstream but which do, tend to receive a lot of support and success. Usually, these currencies are those which were introduced in the early years such as Ethereum and Bitcoin of course. 

Now that you have a brief backstory about cryptocurrencies, I believe that you will be able to have a much better understanding of what we have with us today. To know more, I suggest you read further!

What is Bitcoin?

ETF

Source: Shutterstock

Since today we will be speaking a lot about Bitcoin, it is only logical for you to have a brief understanding of it first. To begin with, just like any other virtual currency in the marketplace, Bitcoin too is a blockchain-based platform that is decentralized. The platform was founded by Satoshi Nakamoto, launched about eleven years ago, back in January 2009. As previously mentioned, Bitcoin too can be used for the purpose of trade and exchange at any cryptocurrency exchange over the internet that has BTC listed in them. 

From where I stand, that should not be a problem as being one of the most popular cryptocurrencies of all time, it should be listed at every other crypto exchange in the marketplace. As compared to traditional payment systems available over the internet, Bitcoin is known to offer a relatively lower cost of the transaction. Also, being decentralized, Bitcoin is very well capable of stepping outside the jurisdiction and overall control of central authorities and can work freely without any government interference.

If you are a fan of cryptocurrencies, you would probably be aware of the fact that virtual currencies including Bitcoin are extremely secure and nearly impossible to double-spend or counterfeit, all thanks to cryptography. Furthermore, it is worth mentioning that, all the transactions that take place over the platform are all recorded and verified through a commonly known process known as mining. 

As noted, Bitcoin is one of the oldest and most popular currencies of all time and has been able to witness a surge in growth and popularity over the years, while triggering the launch of hundreds of other currencies, since it initially came up. Not just that, you should probably know that BTC is the native utility token of the currency and is primarily used for the purpose of trading. 

Now that you are clear with the basics of the currency, let’s talk about statistics. According to a recent report from CoinMarketCap, the current price of the currency is about 61,878.19 US dollars with a twenty-four-hour trading volume of about 38,076,671,871 dollars. Also, with a market cap of 1,166,286,591,790 US dollars, Bitcoin is currently placed at 1st position as per the CoinMarketCap rankings. Apart from that, the current circulating supply of the currency is about 18,848,106 BTC coins with a maximum lifetime supply of 21,000,000 BTC coins.

Everything to know about Bitcoin ETFs

ETF

Source: CRIPTO TENDENCIA

Nearly eight years after the Winklevoss brothers are known to file an application for a Bitcoin exchange-traded fund or as commonly referred to as ETF, the very first Bitcoin ETF in the US will begin trading at the popular New York Stock Exchange (NYSE). According to reports, ProShares, a well-known provider of specialized exchange-traded goods based out of Bethesda, Maryland filed an official application this Friday in respect to starting the trade of Bitcoin Strategy Fund.

In simpler words, on Monday, October 18, 2021, ProShares plans on launching the country’s very first exchange-traded fund (ETF) that is linked to BitcoinBefore moving on further, it is best that we first address the fact that, some of you might be wondering what is ETF? Allow me a chance to explain. An exchange-traded fund or ETF is something that allows investors to easily purchase an entire basket of investments altogether. Not just that, some of the most popular exchange-traded funds track things such as the S&P 500 index of the huge U.S stocks, high yield bond indexes, or even the price of gold for that matter. 

Apart from this, it is worth noting that, unlike what we see in mutual funds, which prices only once a day, ETF can be bought and sold by investors all day long. The relevance of this in the crypto world can be seen in particular currencies whose prices are likely to fluctuate from minute to minute, let alone from day-to-day!

ETF

Source: DC Forecasts

Not just that, it is worth mentioning that the fund will be traded under the ticker BITO, which will help track the prices of Bitcoin (BTCUSD) with the help of futures contracts traded at the Chicago Mercantile Exchange (CME). Also, the ETF is expected to begin trading today, i.e. 19th October 2021, barring any opposition that may or may not arise from regulators. 

This launch is one of the latest milestones for the ETF industry in general as well as Bitcoin of course. As per a report, Michael Sapir, the CEO of ProShares has compared the recent launch of a crypto-linked ETF to that of the first stocks ETF back in 1993 along with the 2002 rollout of the initial ETF bond. 

Over the past couple of years, the US-based market of exchange-traded funds (ETFs) has surged to more than 5.4 trillion dollars and as noted in a report by Investment Company Institute, these ETFs are roughly owned by about nine percent of the country’s households. 

Just for clarification, the fund won’t directly be invested in Bitcoin itself but instead will be focused on futures in respect to Bitcoin, which is a market that is overseen by U.S. regulators, which can be complicated in its own rights. As a result, investors need to specifically be aware of the overall performance of what they are likely to purchase. 

Why is it relevant?

ETF

Source: CoinDesk

Reading so far, Some of you might be wondering as to why is this a big deal? Let me help you with that. An ETF that is related to Bitcoin would help provide investors with a relatively new way to get involved in the rapidly expanding field of virtual currencies. 

Just this year, the price of Bitcoin has nearly increased twofold and as a result, more and more investors have started to see it as a way in order to offer some protection to their portfolios. As per the expectations, the value of Bitcoin is likely to increase in the near future and if it does, it could prove useful in supporting portfolios when inflation is high or when everything is falling apart. 

Considering this, some investors may or may not be interested in opening a new trading account for crypto, if so, they can purchase the ETF with the help of old-school brokerage accounts that they might already be using for their IRA or stocks. 

With this news alone, the prices of Bitcoin surged by nearly 60,000 dollars and in the coming months, it is likely that many traditional firms follow the footsteps of ProShares and start offering investors their very own futures-based crypto ETFs. 

In addition to this, instead of being invested in actual Bitcoins, these will be invested in futures and it is worth mentioning that, ETF is not very ideal for a Bitcoin follower who is wanting to invest in it for a long period of time. As per officials, it has a better chance of being much popular with short-term traders who are looking to make money off its price fluctuations. 

Moving on further, BITO is said to have an expense ratio of nearly 0.95 percent, which means that about 95 dollars out of every ten thousand dollars that will be invested in the fund will be going towards paying off its operating expenses annually. Looking at this, it feels like such fees could prove to be a hard sell for Bitcoin fans as many of them see virtual currencies as a way of eliminating middlemen from the equation. 

ETF

Source: Aussie FIRE Movement

Other than this, as per recent reports, about three other Bitcoin exchange-traded funds are expected to be introduced in trading markets over the next few months. Also, while these EFTs are known to offer exposure to a fast-growing asset class, futures-based Bitcoin ETFs are said to come with various attached caveats. 

Having said that, the path laid down for the approval of Bitcoin’s ETFs has been a rocky one. These ETFs are said to be the Holy Grail by some experts as it has the ability to open floodgates for injection of huge investments in the asset class by institutional investors. 

In Conclusion, you must have realized by now that investing in the most popular cryptocurrency to date, Bitcoin could prove to be a worthy investment and can provide you with a good return in the near future as well, now more than ever when Bitcoin could get a boost from exchange-traded funds (ETFs).

But again, as mentioned at the very beginning, crypto is a highly volatile marketplace and is extremely uncertain. Thus, It is extremely important for you to understand the fact that just like any other currency in the crypto marketplace, Bitcoin, as well as BITO ETF, does have their own risks as well and you should invest only if you are willing to take those risks and bear any and all losses if at all necessary.

If you are wondering, where can you buy Bitcoin? Let me help you with that. Currently, Bitcoin is available on all major crypto exchanges but some of the popular exchanges that have BTC listed on them include Binance, Huobi Global, Mandala Exchange, FTX as well as OKEx to name a few. 

What are your thoughts on BITO ETF? Do let us know in the comments below. To know more about various cryptocurrencies, do check out other articles we have on our website. Thank you for your time & if you found our content informative, do share it with your investor friends!

Also read: Popular publicly listed companies that hold Bitcoin!

 

 

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