I understand why the crypto people wants to talk about Bitcoin ETF. An Exchange Traded Fund (ETF) is an instrument that allows the product to be traded on exchanges. It is a type of investment fund. Why is this so important that the market goes up and down around the speculation around the approval of BTC ETF?
Simple. The answer lies in the technicalities and nuances of how the ETF works. In plain language, having an ETF for BTC allows thousands of investment firms to invest in Bitcoin using traditional financing tools. The ETFs can be traded and exchanged in regulated exchanges which means there will be additional funds coming into the crypto market. That also means the reach of the crypto market will reach new destinations and ultimately helps adoption and acceptance of cryptocurrencies.
So, we know the value of having Bitcoin ETFs and what it can do to the crypto-market. The ETFs on BTC is not an alien concept. The United States has not yet allowed ETFs for Bitcoin but there are other jurisdictions where it can be done. For example, Canada has multiple BTC and ETH ETFs currently available to trade on Toronto Stock Exchange (TSX).
I like to try new shiny objects.
Don't get me wrong. I am not a pervert but a curious kind. I like to try innovative products that come out in the market. I am always up for testing new tech and experience the coolest thing in the market. Same applies to any crypto coins or instruments. Since I can trade BTC ETFs in Canada, I bought a small bag for myself the day they launched. The excitement was there for the new products in the market. I bought and I held. I am never interested in trading.
After almost a year now, I am thinking what's the difference between owning BTC and owning BTC ETF for me as a user. It makes sense for investment firms and the traditional market units to go for ETFs. For someone like me who can legally own BTC,I don't think there is any benefit in owning ETFs.
There are a couple of things that I am not aware of which could be the reason individuals want to hold those ETFs.
Users who do not want to go to crypto exchanges but like to get exposed to crypto market may want to go for these ETFs. That way, users refrain from taking risks of using crypto exchanges but also have the benefits of price upsides.
Similarly, it could relatively easier to tackle the tax issue if you are dealing with ETFs. These instruments are well established and can be easily handled by all tax specialists unlike crypto.
I don't think I would add more ETFs to my portfolio going forward. It will be an interesting space to monitor though.
What do you think Hive? Do you own BTC ETF?