How it works, how to buy in India, benefits, etc.

On October 19, 2021, Proshare trading begins Bitcoin ETF under the ticker symbol of the New York Stock Exchange Bitto. This is considered to be a remarkable achievement of Bitcoin and has aroused many people’s discussions. But what exactly is a Bitcoin ETF? Why is it an achievement and how is it different from the normal purchase of Bitcoin? We will discuss all these points about the Indian Bitcoin ETF in simple terms to help you understand, but if you have some pre-existing knowledge of the stock market, it will be helpful.

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Understanding Bitcoin ETF

What is an ETF?

To understand a Bitcoin ETF, you first need to understand what an ETF is and how it works. ETF stands for Exchange Traded Fund. Think of it as a mutual fund, but unlike mutual funds, ETFs can be traded on your normal day exchange, which is why you can think of it as a fund that can be traded on an exchange, hence the name exchange traded fund.

The cost of this fund is only a small part of the fees you have to pay in a mutual fund, and it can help you diversify your investment portfolio. Basically, this is a cheaper investment.

What is a Bitcoin ETF?

Bitcoin has achieved extraordinary success and has Cryptocurrency industry. So naturally some people want to bring this giant to more people. This is where the Bitcoin ETF comes in.

Bitcoin ETF will replicate the price of Bitcoin, allowing traditional traders to invest in Bitcoin without actually knowing Bitcoin Cryptocurrency exchange, wallet, Transaction fees, blockchain, and worry about their account being hacked or their Bitcoin stolen.

Types of Bitcoin ETFs

Bitcoin ETFs will track the price of Bitcoin, just as ETFs track the prices of different categories such as gold. But there are currently 2 different types of Bitcoin ETFs.

Bitcoin Futures ETF

The Bitcoin ETF launched by Proshares on October 19, 2021 is a futures ETF. It is the first Bitcoin ETF traded in the United States. This means that it is not physically backed by Bitcoin like other futures funds. It will track the future price of Bitcoin. People must decide whether the price of Bitcoin will rise or not. Down.

Bitcoin Spot ETF

The Bitcoin spot ETF will be backed by Bitcoin, and the price will be directly linked to the current Bitcoin spot price. There are many proposals to submit it to exchanges. Some countries/regions have adopted Bitcoin spot ETFs, but the US Securities and Exchange Commission (SEC) has so far rejected all proposals of any Bitcoin spot ETF.

Why not invest directly in Bitcoin?

Good question, but as we discussed. For your traditional investor, it can be very confusing to understand and manage all the different tools and aspects of buying, storing, and trading Bitcoin and cryptocurrencies. ETF is a well-known concept, and investors trust the system and the SEC that are well understood.

How to buy Bitcoin ETF in India?

Unfortunately, at the time of writing, Bitcoin ETFs are not available in India and therefore cannot be purchased through Indian exchanges. Those who live in India but are still interested in buying Bitcoin ETFs will have to buy through apps such as Robinhood that allow the purchase of foreign stocks.

Source: appinventiv

You must open a Demat account on Robinhood or a similar platform that allows external transactions, and then you can buy Bitcoin ETFs within minutes.

Some advantages of Bitcoin ETFs

Bitcoin ETFs will allow investors to access a growing asset class, and since the current ETF is a futures Bitcoin ETF, investors can short their stocks if they believe that the price of their assets will eventually fall. This is a great advantage because if you want to invest directly in Bitcoin, you cannot perform the same operation.

It can also help you diversify your investment portfolio, especially if you are looking for small investments in new areas. Bitcoin has become a very famous thing and has reached a height that people did not expect a few years ago, so if you are a traditional investor, a Bitcoin ETF will be a great first Bitcoin investment.

This is thought to eventually lead to more growth in Bitcoin and make people more familiar with Bitcoin, which was previously considered an intricate digital currency.

wrap up

So this brings us to the end of this article. We try to explain Bitcoin ETFs as effectively and easily as we can to help you understand better, but we still recommend that if you are an interested investor or want to learn more about it, then you should share your own Research.

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