Last Friday, the U.S. Securities and Exchange Commission approved a…futures-based exchange-traded funds based on Bitcoin called the ProShares Bitcoin Strategy ETF (BITO)…[and it started yesterday (October 19th)]. I believe…[it] will be a major factor in making the process of investing in Bitcoins considerably easier, safer, and more convenient. Here are 5 reasons why:
This post by Lorimer Wilson, Managing Editor of munKNEE.com is an edited ([ ]) and abridged (…) version of an article by Giesbers Investment Strategy for the sake of clarity and length to ensure a fast and easy read.
Reason 1: …[While] ETFs do not solve all security issues 100%, they are much more practical and safe than owning Bitcoin at a personal digital wallet at a crypto exchange….
Reason 2: ETFs can be bought from a simple brokerage account…[which] means that investors do not need to take any additional action to be able to purchase and sell Bitcoin. This is in contrast to setting up a new account at a crypto exchange…The steps which investors need to take to buy real Bitcoin are still a bit laborious, and investing in an ETF creates basically the same exposure with much less work.
Reason 3: ETFs will likely track the price of Bitcoin better than available vehicles…
Reason 4: …The BITO ETF has an expense ratio of 0.95%…Because this ETF invests in Bitcoin futures, the price will differ from the Bitcoin ‘spot’ price, so there remain some important differences between investing in this ETF and investing in Bitcoin directly, but the expense ratio is already one of the cheapest available…[That being said,] more Bitcoin ETFs are coming, and…[they] will start competing on the cost level, driving down expense ratios. This is all very positive for investors since it means that costs will go down in the future.
Reason 5: The introduction of ETFs will add to the feeling of legitimacy and security of cryptocurrency as a whole…[In addition,] the introduction of these ETFs might give a boost to cryptocurrency morale: more companies might accept crypto as payment, more individuals and firms might move some of their assets from fiat currency to cryptocurrency and, probably most importantly, the feeling that cryptocurrency is a risky investment with hacks and safety in mind is something that might slowly subside.
Do not get me wrong, I view Bitcoin and cryptocurrency as risky investments. The sharp price fluctuations which are happening in these markets on a regular basis mean that these are not investments for the faint-hearted. At the moment, Bitcoin’s price has rallied following the approval of a Bitcoin ETF, and it has risen to an unprecedented level, making Bitcoin seemingly quite expensive. [While] I am not a buyer of Bitcoin at the current price on the positive side, the introduction of Bitcoin ETFs might be a real coming-of-age moment for the cryptocurrency movement as a whole…adding a tremendous number of new investors. As such, I believe that Bitcoin ETFs can potentially prove to be a tipping point for cryptocurrency.
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