Bitcoin is building its image as a legitimate investment and also as an solid asset. ETFs is an Exchange traded fund, which means ETF is an investment fund that tracks the price of an underlying asset. ETFs exist in many different industries and asset classes. let us understand this with an example of gold, Gold ETFs have been existed for decades, and they track the price of gold. Basically when people talks about Bitcoin ETFs they are generally talking about ETFs on US markets but ETFs exists in many markets. For example- the 1st Bitcoin ETF was launched in Canadian stock market and trades on Toronto stock Exchange with the ticker of BTCC.
"A bitcoin ETF will also be working in a same way- The price of ETF will follow the price of the bitcoin"
Exchange traded fund ETFs is also a regulated financial products because they trade on the traditional markets like NASDAQ or NYSE and not on some random cryptocurrency exchange.
Why is a Bitcoin ETFs are important?
- Well Bitcoin is not a easiest asset to deal with, let us understand this with example- Goldman sachs which is a major corporate and a large institution would not just plug a hardware wallet into a laptop and transfer $2B of BTC on it. Well, This process can cause a serious problem and also induce tension to some large institutions like Tesla. Large financial institutions who posses the investment on BTC do not operate in the same manner as individual investors. So, due to the concerns like safety, security, and easiness in process they need a proper financial plumbing and regulatory framework to be able to participate properly in the crypto space without any additional tension.
Bitcoin ETFs will improve the potential investor base. it can give price exposure for participants in the traditional markets. And could also hold assets other the BTC, for example- A Bitcoin ETF can also hold assets like ETH, Tesla stock, Gold and many more. These ETFs will also provide some Diversification Benefits to investors.
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