An exchange-traded fund (ETF) is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, ETF trades like a common stock on a stock exchange.
An ETF’s price changes throughout the day as they are bought and sold. An ETF is an investment vehicle that you can use to invest in a group of assets. It’s like a mutual fund, but instead of buying into a fund that contains stocks and bonds, you’re buying into a fund that contains Bitcoin.
Bitcoin has become a buzzword in the investing world. The digital currency is not backed by any government or central bank, and it can be traded on exchanges around the globe. Bitcoin is a volatile currency, so it’s not for everyone. It’s also way more complicated than investing in stocks and bonds.
A bitcoin ETF is an exchange-traded fund that tracks the value of digital currency, allowing investors to buy and sell shares in the fund without owning the actual cryptocurrency. Bitcoin is the first cryptocurrency. All cryptocurrencies are based on blockchain technology, where transactions are recorded in a public ledger and new units are created through mining.
If you’re going to invest in bitcoin, one of the best ways to do it is through a bitcoin ETF (exchange traded fund). Bitcoin ETFs are easier to buy and sell than bitcoins themselves, and they come with a lot less hassle.
You don’t have to worry about safekeeping it, and all the other aspects that come with cryptocurrencies. It’s a transparent exchange-traded product.
Bitcoin ETFs are one of the most talked about topics in the crypto market, but they still have a tough road ahead.
The SEC is still figuring out what to do with Bitcoin ETFs, but there are currently a few ETFs that you can invest in. VanEck and SolidX have both tried to launch bitcoin ETFs in the past. Both times, the SEC has shot them down, saying that they are too susceptible to fraud and manipulation.
In 2019, the SEC blocked several bitcoin ETF proposals and consistently turned back their applications, since they didn’t see this type of ETF as an opportunity for institutional investor acceptance.
Right now there are no bitcoin funds or ETFs on the market but there are some pending approval and other alternative options. So no, you can’t buy Bitcoin on Fidelity funds.
The SEC has not approved a bitcoin-based ETF yet. The Grayscale Bitcoin Trust (GBTC) is actually an investment fund that exists specifically because of the regulatory uncertainty about bitcoin. The way this works is that investors pool their money to buy bitcoins and then they trade on an over-the-counter market.
GBTC is a unique way to get exposure to bitcoin without actually having to buy it. It kind of works like a fund, as pooled investors and the company both purchase bitcoins. Unfortunately, the premium to its net-asset value is incredibly large right now, making it less desirable to investors looking for an easy way to gain access to bitcoin.
The VanEck SolidX Bitcoin Trust is an exchange-traded fund (ETF) that will be insured against loss or theft of bitcoin. It will track bitcoin prices and would be available to investors through their regular brokerage accounts.
Other options are to buy funds with exposure to the sector, without holdings directly in cryptocurrencies. We realize here two options:
1. Amplify Transformational Data ETF
Amplify Transformational Data Sharing (BLOK) invests at least 80% of its assets into stock of blockchain technology companies. The five main sectors (by weighting) are software and services (30.9%), diversified finance (20.5%), media and entertainment (19.9%), retail (9.8%) and banking (8.1%).
Amplify Transformational Data Sharing invests the majority of its assets into high-quality companies that use blockchain technology to innovate and grow.
2. Goldman Sachs Finance Reimagined ETF
The Goldman Sachs Finance Reimagined ETF (NYSE:GFIN) has 119 holdings. It invests in companies it believes are innovative within the financial services sector. The five largest holdings comprise 20% of total fund holdings, valued at around $30 million.
If and when bitcoin ETFs are launched, it’s likely that they will see early success, as both cryptocurrency enthusiasts and traditional investors take part. In turn, the rise of bitcoin ETFs could also help to fuel gains across the cryptocurrency market. Because many other digital currencies are closely tied to the performance of bitcoin, gains in the ETFs could lead to widespread gains in other cryptocurrencies, as well.