🔥 Bitcoin ETF 2021- is it worth investing in an ETF?
Bitcoin ETFs made headlines as early as 2018 as they offered a completely new way of investing in the technology of crypto currencies should allow. Right from the start, Bitcoin ETFs were seen by fans as a tool to promote the acceptance of the cryptocurrency; At the same time, proponents were convinced that even critical investors would be able to see the potential of crypto currencies, especially Bitcoin.
An exchange-traded fund is an investment variant that has been available on the market for around 20 years. It looks different with cryptocurrencies - the Bitcoin is not yet 15 years old. There are Proshares ETFs, but also ETFs from iShares; For some time now, ETFs that are sold by other companies and explicitly deal with crypto currencies have also been used.
What is an ETF?
An exchange traded fund is a fund, or even a security, that by its nature is used to track prices of the underlying assets on which the fund is based. These can be classic assets - for example oil or gold. But it is also possible that the fund tracks bonds, stocks such as commodities or Bitcoin.
An exchange-traded fund behaves much like a traditional stock. At least in the way that on regular Platforms is traded. The fact that exchange-traded funds have become increasingly popular in recent years may be due to the potential for selling as well as buying. The solid liquidity also plays a role that should not be underestimated. Exchange-traded funds particularly score points with a lean fee structure.
Due to the fact that there are always misunderstandings regarding the ETF potential, it may be important to obtain appropriate information in advance. To start with, it's important to understand how an ETF is created.
A custodian bank, which can be an asset company, or a traditional bank a crypto exchange like Coinbase gets money from investors, which is then invested in stocks that are linked to the underlying asset. The parties who are responsible for the acquisition of the underlying assets in favor of the exchange-traded fund are called authorized participants.
The authorized participant further distributes the assets to the ETF providers and receives fund shares in return. Thus, the value of the shares is related to the value of the assets received by the ETF provider. In this way, the investor then takes on the role of the fund shareholder, but without becoming the owner of the underlying assets.
Why ETFs will primarily appeal to private investors
With ETFs, private investors as well as institutions can now use the opportunity to deal particularly intensively with Bitcoin. Because even if you keep reading that it is dangerous to work with Bitcoin, there are still some positive aspects - especially with regard to the Bitcoin ETF. So what should you look out for when buying a Bitcoin ETF?
Because if you invest directly, you have to invest a correspondingly high amount in order to to get hold of a coin. Of course, there is also the option to only invest a certain amount, for which you then receive a share of a coin. If you take into account the fact that Bitcoin has a price of around 55.000 US dollars (as of the end of April 2021), there may be few private investors such as savers who can buy this amount for a whole Investing Coin want. Especially because it is a very volatile market.
With an ETF you can cushion the volatility a little. Above all, it is possible to invest at regular intervals with a savings plan, so that a cost average effect forms over time. Anyone who invests around 100 euros a month will always get a different share of the digital coin. In the end, this results in an average return.
Another advantage of the ETF is that no wallet is required here. Because who Buy coins of the cryptocurrency Bitcoin want, they then have to keep them in their digital wallet. Various variants are available here - there is the online wallet or hot wallet, but there is also the hardware wallet or cold wallet. Depending on the wallet variant, there are then advantages and disadvantages to consider.
However, if you invest in an ETF, you don't need one Wallet. This means that you don't have to deal with the possible risks that a digital wallet brings with it.
Why you shouldn't confuse a Bitcoin ETF with a Blockchain ETF
A Bitcoin ETF should not be equated or confused with the blockchain ETF. Even if to be fair it has to be said that there is a superficial similarity. A blockchain ETF is then used to track prices from a company that invests in this novel technology on the the multitude of cryptocurrencies also based - including Bitcoin.
The Bitcoin ETF should not be confused with a Bitcoin-based Exchange Traded Notes. Because ETNs may have a few similarities with the ETF, but are completely different in detail. ETNs are structured products that are issued as so-called senior debt notes. Compared to ETFs, these represent the participation in the underlying asset. In addition, ETNs behave in such a way that they can be compared more with bonds. That means they are unsecured. ETFs, on the other hand, offer investments in the fund, which contains stocks as well as bonds or gold. In addition, the reputation of the ETNs with the regulatory authorities is slightly better than that of the ETFs.
Looking for a recommendable provider
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Which ETFs can be recommended?
There are various ETFs. It may therefore be advisable to deal with the scaffolding in the background beforehand. Is it advisable to opt for the JP Morgan Crypto ETF anytime soon? It should be noted that investments are made in stock corporations that deal with crypto currencies, especially Bitcoin. There is no Investing in Bitcoin and Co. JP Morgan's trust in Bitcoin may not be so pronounced here.
If you are interested in an ETF on Bitcoin, in addition to the performance and the methodology of the index, you should also consider other relevant factors in order to be able to find the best investment opportunity for yourself.
The following ETFs are particularly interesting:
- HANetf BTCetc Bitcoin Exchange Traded Crypto (ISIN: DE000A27Z304): The fund size is around 1,062 billion euros. The TER is 2 percent. It is a fund based in Germany that is accumulating. The replication method? Physically secured.
- 21Shares Bitcoin (ISIN: ETPCH0454664001): The fund size is around 268 million euros. The TER is 1,49 percent. It is a Swiss domiciled fund that is accumulating. The replication method? Physically secured.
- WisdomTree Bitcoin (ISIN: GB00BJYDH287): The fund size is around 263 million euros. The TER is 0,95 percent. It is a Jersey based fund that is accumulating. The replication method? Physically secured.
- VanEck Vectors Bitcoin (ISIN: ETNDE000A28M8D0): The fund size is around 142 million euros. The TER is 1,00 percent. It is a Liechtenstein-based fund that is accumulating. The replication method? Physically secured.
- With the Bitcoin Exchange Traded Crypto on Bitcoin (de000a27z304 onvista) there is another way to speculate with bitcoin.
A look at the performance shows that things have only gone up here so far
Of course, it is also about the performance, which plays a role when you consider investing in a Bitcoin ETF. The following information is based on the status at the end of April 2021:
- Within the last year, the WisdomTree Bitcoin was able to achieve an increase of 738,36 percent. Within the last six months the increase was 441,66 percent and within the last three months it was possible to achieve an increase of 113,36 percent. Last month there was an increase of 28,74 percent.
- Within the last year, the 21Shares Bitcoin ETP was able to achieve an increase of 738,32 percent. Within the last six months the increase was 440,36 percent and within the last three months it was possible to achieve an increase of 118,25 percent. Last month there was an increase of 27,78 percent.
- Within the last six months, the HANetf BTCetc Bitcoin Exchange Traded Crypto was able to achieve an increase of 441,73 percent. Within the last three months it was possible to achieve an increase of 120,21 percent. Last month there was an increase of 26,69 percent.
- The VanEck Vectors Bitcoin ETN achieved an increase of 117,67 percent in the last three months and an increase of 29,30 percent in the last month.
Investing with risk, but with the prospect of high profits
It may not be safe to choose to put the money in Bitcoin and Co. to be stuck. Not even if you have decided to invest in ETFs. It is important to choose a long-term strategy and to be aware that losses are always possible - but that you can make correspondingly attractive profits. We at Bitcoin-News.one Accordingly, we recommend anyone who describes themselves as risk-conscious to take a closer look at the crypto market and its connections to the classic investment world.
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