Introduction
A Bitcoin Futures ETF or Exchange Traded Fund, is a financial tool which allows you to buy the right to buy or sell Bitcoin,
-- a certain number of Bitcoin,
-- at a certain price,
-- for a limited period of time,
-- and that means your rights to buy are temporary.Normally when you buy something it is permanent, you buy it and you own it.
But with a Bitcoin Future you are not buying Bitcoin , you are Buying the Right or Option to Buy Bitcoin, and this right is temporary, it lasts a certain time period, and when your time period expires, so do your rights. So when it expires it becomes worthless, so you have to sell it before it expires, to someone else,
Some would say This is crazy and they would be half right.
You see there are traders who never want to own anything. They make money, buying and selling the right to buy or sell. They are constantly buying and selling, and the thing that they own, is the money they make from buying and selling the right to buy assets and commodities.
So, as that’s what you want, then a Bitcoin Futures ETF is a good trading vehicle for you. However, if your intention is to buy and hold, then a Bitcoin Futures ETF is not for you.
Body
What is an ETF? Exchange Traded Fund
- An ETF or Exchange Traded Fund is a financial instrument used in markets where you can’t actually buy an asset or commodity. In this case Bitcoin.
- An ETF is an investment created by an investment company buying an asset or commodity or a group of assets and commodities, and then selling ownership shares to this pool.
- The shares represent ownership of a fraction of the asset value of the pool. If the pool asset value goes up, the share price goes up.
- So if you own shares of the pool, you don’t own the asset or commodity or group of assets/commodities, but you own a share of its dollar value.
- ETFs are a complicated way to own an asset or commodity in certain instances where the government doesn’t allow you to invest directly in an asset or commodity.
- They were invented by investment companies to make money in situations where there are customers wanting to own an asset or commodity, but since the government says they can’t own it, the company buys it, then sells shares of the value to the customer and makes money. It would be simpler for the government to allow people to buy the asset or commodity, but that's not reality.
- So you can’t currently buy Bitcoin for your retirement account, but you can shares of a Bitcoin Futures Exchange Traded Fund.
Bitcoin Futures ETF
- A Bitcoin Futures ETF is a little different from a regular ETF where you buy shares of the dollar value of an asset. In a futures ETF you are actually buying the dollar value of the right to buy an asset.
- The right to buy an asset is called a Futures Share, and it gives you the right to buy an certain Asset, at a certain price, for a certain time period, and it expires. And once again, in this case, the asset is Bitcoin.
- So a Bitcoin Futures ETF allows you to own the right to buy or sell a certain amount of Bitcoin, at a certain price, for a certain period of time, and it’s temporary.
- Because a Bitcoin Future is temporary, you are constantly buying and selling futures, and never really own Bitcoin.
- Additionally, while an ETF has one transaction fee, a futures ETF has two transaction fees or more a month. Because you pay a transaction fee to buy, and a transaction fee to sell. You have to sell to recoup your money you used to buy, otherwise you lose your entire investment every month.
Last Words :
- A Bitcoin Futures ETF allows you to buy and sell, the dollar value of the right to buy and sell, a certain amount of an asset or a commodity, at a certain price, for a certain time period. And this financial instrument has a limited lifespan, of usually 30-90 days. which give you the right, to buy or sell Bitcoin, at a certain price.
- We need this financial tool or instrument, to invest in Bitcoin, because the government doesn’t allow you to buy Bitcoin in your retirement account.
- In my opinion a Bitcoin Futures ETF is like Stock Options for Bitcoin, and apparently the SEC agrees with me because they use the Chicago Board of Options Exchange to monitor the Bitcoin Futures ETF for price manipulation.
- Stock options are notorious for 80-90 percent of them expiring worthless and investors loosing all their investment.
- Thus far the record of the Bitcoin ETF has been similarly bad, for investors.
- When you understand how stock options work, and how risky they are, you see the Bitcoin Futures ETF for what it is, a bitcoin options market, of a super volatile asset, with similar investor financial losses to the stock options market, where people who buy options loss money 80-90 percent of the time.
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