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First trust inverse bitcoin strategy etfHow To Profit Investing In One Of The Few Bitcoin ETF's In The World
The Bitcoin ETF price? Well, it is a bit volatile but with volatility comes opportunity. In fact, based on past performance there is a high likelihood the Bitcoin ETF will trade at a premium to the underlying currency. They may not be a holy grail but they are an attractive choice for investors who want exposure to cryptocurrency without the risk, hassle or tax liabilities associated with owning Bitcoin.
The GBTC ETF is intended to track the price of Bitcoin but has proven to trade with premium and discount to the underlying currency depending on market sentiment. The great news for smaller investors is that each share of GBTC is a fractional portion of a Bitcoin making them much less expensive to purchase while still tracking the price of the underlying asset.
The funds assets, its Bitcoins, are held in deep cold storage vaults offline, not connected to the internet at Xapo, Inc. They protect the Bitcoin access keys with several layers of security including encryption, physical and process security ensuring the token keys are safe from hack and attack. Or, if you prefer, there is also a diversified fund called the Digital Large Cap Fund which invests across the cryptocurrency market.
What is a Bitcoin ETF? An exchange traded fund intended to give investors exposure to the cryptocurrency market. They are SEC approved in most cases investment funds benchmarked to Bitcoin in some way.
The simplest invest directly in Bitcoin, an endeavor with inherent risk. The good news is that the SEC seems to be changing its views. It will spark a flood of new investment and liquidity that will drive prices higher over the long term. Just like with the advent of cryptocurrency, early adopters of cryptocurrency ETFs will be well rewarded. There are three primary advantages of owning the ETF vs currency in a Bitcoin investment strategy. These are easier access, liquidity and integrity. In order to own Bitcoin, and to own Bitcoin in substantial quantity suitable for investment purposes, an individual must open an account with an exchange, have a wallet and the ability to store their token keys offline cold-storage.
If you buy the ETF all you need is the brokerage account you already use for traditional stock investing. An account with a Bitcoin exchange is not backed by SIPC, the Securities Investor Protection Corporation , the way a brokerage account is, putting it at risk of theft and fraud. Bitcoin presents a conundrum for us.
On the other hand, there must be some sense of valuation. Has bitcoin gone too far, too fast? We are definitely wary of anything that has experienced price appreciation outpacing the Dutch Tulip Mania which bitcoin has. Even the good ones, Cisco, Microsoft, Amazon, etc. In the meantime, check out our list of inverse etfs for a new section dedicated to short bitcoin and other crypto products.
Of course, when the first bitcoin inverse ETF is announced, we will let you know. Inverse ETFs are often run via a derivative called a swap agreement with a counterparty, so an inverse bitcoin ETF is technically a derivative of a derivative the bitcoin futures of a digital currency which is not redeemable in dollars. There is no telling how much margin or collateral will need to be posted in a bitcoin ETF, probably a substantial amount.
Whichever side you choose, long or short, a bitcoin etf is likely to be one of the most followed investments in the market today. Previous Next. Facebook Twitter Linkedin Pinterest Email. About the Author: inverseetfs. Related Posts.