Bitcoin ETF: disadvantages and advantages over conventional Bitcoin

What is a bitcoin ETF

17 Dec, 2019 Colin Baseman

Bitcoin ETF is a special Fund, its shares are traded on the stock exchange. He buys bitcoin and offers investors his securities. The latter invest their money in the organization in order to earn on the growth of the coin rate. The cost of bitcoin ETF directly depends on the rate of cryptocurrency №1.

Why do many people prefer bitcoin ETFs over regular bitcoin?

In the classic financial world, an ETF is more familiar. Every year it becomes more and more popular. In the article "How to make money on Bitcoin ETF” you can read about the opportunities for profit that this tool opens.

To invest in a bitcoin ETF, an investor does not need to start a digital wallet, register on the crypto exchange, solve the security issues of storing their assets and much more. The depositor is protected from the risks of hacking sites, phishing attacks and fraud greedy for dishonest profits of the owners of exchanges. Such a tool allows classic investors to earn on cryptocurrency without going into the technical aspects of its use.

Someone believes that thanks to the implementation of bitcoin ETF, large investors will come to the crypto market. As a result, its capitalization will increase and new assets will appear. 

For example, Ari Paul, who is one of the founders of the hedge Fund BlockTower, is confident that the arrival of institutional investors will be a key driver of the subsequent medium-term growth in the price of bitcoin. In his opinion, the main obstacle to entering the market of large investors is the lack of reliable solutions for storing cryptocurrency and tools that target large market participants.

Top Manager of IronWood Michael Stratton believes that if approved by the us securities Commission ETF based on cryptographic currencies, investment funds and corporations will come to this market. Fidelity is considered the most likely.

Arguments against bitcoin ETFs

A number of famous representatives of the cryptographic world do not hide their skepticism towards the funds that are traded on the exchange. So, expert and market participant Toy Weiss said that the value of bitcoin after the start of the ETF will not necessarily increase.

Andreas Antonopoulos thinks such funds are a bad idea. This position is based on the belief that the ETF will lead to increased centralization of the ETF market and active manipulation of large investors. According to cryptographer nick Szabo, the harm from the arrival of institutional investors in the market may be more than good.

Vitaly Buterin, who is the Creator of Ethereum, believes that the cryptocurrency industry needs more useful applications than exchange-traded funds.

As you can see, the attitude to the bitcoin ETF is not unambiguous. Some of the well-known experts believe that the arrival of institutional investors on the market will greatly revive and promote the development of the crypto world. Others claim that the harm from this tool will exceed the benefit from it. Our crypto-portal will closely follow the developments and inform you about them, our dear readers!