Understanding The Concept Of Bitcoin ETF

If there is anything to expect in the crypto world, the answer would possibly be Bitcoin ETF. Cryptocurrency is no more a brand new concept now. It has been in existence since the inception of Bitcoin on 3rd January 2009. However, when it comes to Exchange Traded Fund for the foremost cryptocurrency, BTC, regulators are very anxious about its implementation. This fear is all due to the volatility factor that is common in crypto assets. Newly investors might fall in trouble after risking their funds.


In the current years, SEC (Securities and Exchange Commission) is known to have dismissed many requests for Bitcoin Exchange Traded Fund. But nowadays, it is facing constant pressure to give a green flag for it. Today, I am going to discuss its functioning and will also find out whether it is going to happen or not. But first, let me brief you about what exactly do we mean by cryptocurrency ETF funds.


What Are Cryptocurrency ETF Funds?


Before proceeding on to know Bitcoin ETF and its working, let me brief you about cryptocurrency ETF funds. The working of cryptocurrency ETF funds is just similar to Exchange Traded Fund. But there is a difference. In ETFs, limited assets are traced, whereas, in cryptocurrency ETF, multiple digital tokens are under view. Pointing out another similarity with other exchange-traded funds is the utilization of digital tokens on an exchange for trading purposes, which is just like stocks. When investors actively buy and sell regularly, then the expectation of price change is always there. Conventional investors always eye ETFs as they find it very beneficial in keeping barriers at bay.


Knowing Bitcoin ETF


ETF is also known as an exchange-traded fund. It shares common characteristics with government-issued currencies, stocks as well as goods. Now, what do you understand by Bitcoin ETF? How does it function? Funds are accumulated from investors by cryptocurrency exchange or banks with regulation policies, they purchase BTCs from their side. After that Bitcoin ETF is given to a purchaser in return as shares with price status (either up or down) according to the value of cryptocurrency.


Now, it must have triggered you in thinking what is the purpose of Bitcoin ETF then, when people can prefer buying Bitcoins with money? Why there is a need for a mediator for investment?


There is a reason behind it, which is most of the future investors are not in the favour of owning BTC, physically. Also, some are not comfortable in securely keeping the coins. They are also impatient in facing technical problems while generating a wallet. If it is implemented properly, then there are no such issues dealing with ETF and Bitcoin from the investors’ side.


Bitcoin ETF has been the centre of interest to make speculation about how it can pave cryptocurrency is becoming more relevant to traditional institutions dealing in finance. It has inculcated the main concern for the investors who have been familiar with stocks before. The journey of cryptocurrency has never been so easy. The newly digital monetary concept had to struggle a lot for its acceptance. It was all due to misconceptions and suspicion regarding its illegal use. 


Advantages Of Bitcoin ETF


Bitcoin ETF is expected in removing the wrong notion of circulating cryptocurrency. It can reform the latter technology in building trust as well as customer security. It can become the underlying factor behind the major acceptance of BTCs. And it can be made possible by Bitcoin ETF in boosting crypto awareness by imparting knowledge of blockchain and worth of digital currency, and many more.


Bitcoin ETF has gained immense fame among investors from retail sectors. It has even become the safest way to invest in digital currencies. Hence, major cryptocurrencies like Bitcoin and Ethereum can be utilized for security type as well as for keeping liquidity for asset purchasing and selling.


Demerits Of Bitcoin ETF


Bitcoin ETF can have its downsides too. As you are aware of the fact about the maximum supply of BTC is limited to 21 million, so there can be an adverse impact if a considerable quantity is locked resulting in price instability. Adding on more to it, the business who claim to offer Bitcoin ETF, have to prove their commitment to being reliable. Currently, regulatory bodies like the Securities And Exchange Commission is surrounded with deep concern to wipe off risks of cheating and forging prevailing in this fast-rising sector.



There is a possibility regarding Bitcoin ETF to make its wider impact in the crypto world. It can pave for major acceptance for cryptocurrency as exchange mediums. There have been several crucial issues that have spawned the need for Bitcoin ETFs. One of the biggest factors is cyber-attack on wallets as well as on exchanges. There has been news about market downfall caused by the interference of big players also called whales. Investors can make a fresh start without bothering about a lack of skills. If you are interested in knowing about the best cryptocurrency ETF, then Cryptoknowmics is the best site to visit.

Leave a Comment