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All You Need to Know About Bitcoin ETFs

BitForex Editor
Apr 01, 2021

When Bitcoin came to the market, it was a relatively unknown currency, but fast forward to this present year, it has led to the emergence of other cryptocurrencies. There are lots of digital currencies in the market space, but right now, our focus would be on everything pertaining to Bitcoin ETFs.

In this article, we would broaden your knowledge on what Bitcoin ETFs is, how it works, the pros and cons of Bitcoin ETFs and tell you about if they exist or not. So, you should keep reading to be more enlightened.  

What are Bitcoin ETFs?

Before we explain what Bitcoin ETFs are, it is important to know that Bitcoin is a digital currency and with that, transactions are made without the interference of a third party, like the banks. Also, ETFs mean exchange-traded funds.

So, Bitcoin ETF s are exchange-traded funds that monitor the value or price of Bitcoin, and instead of trading on cryptocurrency exchanges, it focuses more on the traditional market exchanges to trade.

How does it work?

It works in a systematic way. The moment there is a rise in Bitcoin, the ETF also experiences arise as well. It would interest you to know that ETFs are available to various industries as well as assets. But here is the trick, instead of the ETFs to trade on the cryptocurrency exchange, it would rather trade on a market exchange. A good example of market exchange is TSX.   

Now, moving ahead it's time to look at some of the advantages as well as the disadvantages of the Bitcoin ETFs.

Pros of Bitcoin ETFs

The Bitcoin ETF does have some interesting advantages, and we shall discuss a few. They are:

1.Investing in Bitcoin gets easier: The Bitcoin ETFs can actually not only be bought, but they can be held and sold with the help of a brokerage account. One thing that would interest investors here is that there is absolutely no need of having to create a cryptocurrency wallet as the stress of going through this route is dissolved. As an investor, you can trade Bitcoin through ETFs as there is no step that you would have to take before trading. Banks, brokerages are already set up to enable trading ETF s.

2.It is a convenient method: Nothing would make an investor or investors happier than knowing that they need not have prior knowledge of how Bitcoin works before investing in a Bitcoin ETF. The general consensus about Bitcoin is that it is held in a wallet, and failure to remember or the misplacement of that wallet password, would invariably mean the forfeiture of the investor's Bitcoin. So, knowing you don't have any wallet to lose would make more investors excited about the prospect of using the Bitcoin ETF.

3.Deal with the businesses you trust: With the rising trend of online fraudulent activities, it is best to work with a business you can not only rely on but one that would be duly monitored. This is why regulated bodies issue Bitcoin ETF in order to prevent market abuse from happening.  If it were cryptocurrency exchanges investors invested in, then it is an entirely different aspect.  

Cons of Bitcoin ETFs

It is advisable that investors exercise caution when dealing with Bitcoin because for starters it is a digital currency and not just an investment. This is why it has some disparities when comparing it with purchasing Bitcoin on the crypto exchange. Some of the cons are:

1.ETF inaccuracy: The ETF is solely responsible for monitoring the price of assets, they also have a lot of holdings which makes it possible for them to diversify the portfolio.  What this means that even though there might be a rise in Bitcoin, say 50%. Such a rise in price might not totally reflect on the exchange-traded fund due to its holdings.

2.No one knows if Bitcoin is a good long-term investment: The price and the future of Bitcoin remain sketchy. The current market for Bitcoin shows that it is on the rise. However, before an investor can purchase it in large numbers, they may have to carry out intensive research so as not to fall into a loss.

3.Management fees: One aspect of the Bitcoin ETF is that for the convenience they render, they would charge a management fee. What this means is that the higher the investment, the larger the management fee one could incur over time.

Do Bitcoin ETFs exist?

It would interest you to know that as of now, there is no Bitcoin ETFs. The reason being that Bitcoin is largely unregulated and as you would know, it makes it easier for large shareholders to manipulate the market.

Although there are publicly traded funds that carry out investments with Bitcoin, there are no Bitcoin ETFs available. More so, to gain more insight on Bitcoin without necessarily purchasing it is when the investor carries out investments in either blockchain companies or cryptocurrencies. By so doing, the crypto market is leveraged.


Bitcoin still remains an ever-growing digital currency, although many individuals view it as a risky investment, it is still worth purchasing or having a share of. In addition, some jurisdictions permit exchanges with Bitcoin ETF.

There are many questions as to who invented Bitcoin ETF, and it is worth noting that no one can claim ownership of Bitcoin ETF since it is a regular ETF with Bitcoin.  

Lastly, having talked extensively on what Bitcoin ETFs are, as well as how it works, we have successfully expanded your knowledge about Bitcoin ETF. Also, we have not only looked at the pros but as well given more insight into its disadvantages. To this end, investors would need to carefully study the market or have an expert monitor it before investing in large sums of Bitcoin. The reason being that by following the right path, they would invariably be reducing their chances of losing their investments.

About BitForex:

BitForex is an exchange service platform that can be classified as one of the Top 10 cryptocurrency exchange services. It is focused on providing millions of users with a digital currency trading and investment tool that is not only safe but also professional and convenient. BitForex has a high customer-oriented culture and state-of-the-art financial technology.

BitForex is programmed in a way that it can quickly adapt to the changes of the Crypto market while introducing new features like margin trading, enhanced trading charts,  derivatives, and a host of others. The headquarter of BitForex is located in Hong Kong, while there are branch offices in countries like the United States, South Korea, and Singapore.

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