The first Bitcoin exchange-traded fund (ETF), offered by ProShares, launched on Tuesday this week. It is traded under the symbol BITO and will allow equity investors to gain exposure to the digital currency without having to purchase it on a crypto exchange.
How and where to buy Bitcoin ETFs
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What is the Bitcoin ETF?
Before buying Bitcoin ETF (BITO), one must first distinguish between Bitcoin and Bitcoin futures. In essence, a futures contract for any asset is simply an agreement to buy or sell the asset on a future date and at a predetermined price.
Now, buying Bitcoin ETF means you are buying a stock whose value fluctuates based on the price of Bitcoin futures contracts traded on the Chicago Mercantile Exchange.
Should I buy Bitcoin ETF today?
Many professional fund managers agree that it is a reasonable strategy not to invest more than 5% to 10% of your total portfolio in crypto assets. Buying the new BITO Bitcoin ETF is ideal for many investors who want to be exposed to Bitcoin but do not want to go through the process of opening a crypto account.
Bitcoin ETF Price Predictions
According to experts at Fundstrat Global Advisors, the price of Bitcoin could exceed $ 166,000 by the end of 2021. However, the price of Bitcoin does not necessarily correlate with the price of ETFs, which is confusing.
This is because futures contracts are not directly backed by physical Bitcoin, but rather by a derivative of Bitcoin. For example, Bitcoin can gain 40%, but Bitcoin ETF can only increase by 30%. This is because future ETFs have contracts that expire periodically and must be redeemed.
