Bitcoin ETFs have always been a headache to the crypto ecosystem, but not everything is as bad as it seems. There are some who have managed to beat the regulators. How many available Bitcoin ETFs can be traded today?
Tom Lydon, CEO of ETF Trends, appeared on CNBC’s ETF Edge and said: “The potential for approval of the Bitcoin ETF in 2020 is a key topic of discussion, as such a product could potentially have an impact on the price of Bitcoin.”
How does a Bitcoin ETF work?
It is an investment vehicle that tracks the performance of a particular asset or group of assets. They allow you to diversify investments without owning the assets tracked by an ETF.
ETF / ETN
In practice, the two are very similar. Both are designed to track an underlying, both often have lower cost ratios than actively managed mutual funds, and both operate like stocks on major stock exchanges.
The main difference when investing in an ETF is that you are investing in a fund that owns the asset it is tracking. This asset can be stocks, bonds, gold or other commodities.
Which one is better?
If you follow the rule that you should only invest in what you understand, ETFs are a better option. Part-time investors find it easier to understand products with share-like characteristics.
The most popular publicly traded products are ETFs. One of the most popular ETNs is the JP Morgan Alerian MLP Index ETN (AMJ).
In contrast, according to ETF.com, the SPDR S & P 500 (SPY) ETF has an average daily volume of more than 168 million shares. This clearly shows that investors’ appetite for ETFs is heavily weighted.
Would you like to invest in ETFs? Do you know the guys
There are a variety of fund ETFs and equity ETFs that you can trade with, e.g.
- For country: You can access stock markets around the world. For example, if you think the Taiwanese stock market will rise, you can trade the iShares MSCI Taiwan ETF.
- By industries– If you think the UK real estate sector could have problems, you can trade the iShares UK Property UCITS ETF.
- Specific– CFDs on ETFs such as the SPDR S & P Metals & Mining ETF allow you to get involved in the global metals and mining market.
- Index specific: You can trade the ETF via the Vanguard S & P 500 ETF in the S & P 500 index.
There are many more types of ETFs to choose from, including bonds, currencies, new growth markets like biotechnology and artificial intelligence.
One area that has always fascinated investors is finding the best tech stocks and tech ETFs to trade. After all, we use technology in our daily life and they are always leading with their innovations.
So let’s take a closer look at the technology ETF sector.
Best ETFs – technology sector
You will find a large selection, for example the Technology Select SPDR Fund ETF (#XLK). There are 75 stocks, including industry giants such as Apple, Microsoft and Facebook.
They can also benefit from the development potential of artificial intelligence, especially from various aspects of industrial or non-industrial robotics, automation, social media, autonomous vehicles and natural language processing.
Other ETFs from various sectors such as finance, health, energy, aerospace or defense that have great growth potential.
- iShares US Home Construction ETF CFD (ITB)
- iShares Global Energy ETF CFD (IXC)
- SPDR S&P Bank ETF CFD (KBE)
- VanEck Vectors Oil Services ETF CFD (OIH)
Oil and energy ETFs are among the worst this year, with losses of over 80%. They dominated downward, making up nine of the ten worst performing ETFs in 2020 and 13 of the twenty worst performing ETFs.
An interesting fact is that the cryptocurrency has undoubtedly managed to hit one, although no Bitcoin ETF is available.
Experts have recently caught the attention of experts that Bitcoin has clearly outperformed the SPDR Gold Trust ETF on tight deadlines each year. In particular, the spot rate of the cryptocurrency rose by more than 51% since May 13, 2019 and exceeded 32% of the SPDR during this period.
This is obviously remarkable as it shows us how Bitcoin can be a much more profitable asset than derivatives based on traditional gold.
Then why don’t they approve Bitcoin ETFs?
Regardless, the SEC has declined several Bitcoin ETFs in recent years. The last to receive the rejection was Wilshire Pheonix’s proposal in March.
However, the lack of approval of a Bitcoin ETF has not prevented institutional capital from entering the crypto industry.
In fact, Grayscale recently published its report for the first quarter of 2020, which found that capital inflows from institutional investors increased significantly.
“88% of the contributions this quarter came from institutional investors, the vast majority of which were hedge funds.”.
Grayscale noted in his report.
However, the premium paid by investors at the Grayscale Bitcoin Trust was substantial. This could certainly be resolved by a Bitcoin ETF.
Similarly, VanEck has launched a new product that, according to the company, is very similar to a Bitcoin ETF. Why is?
“The Rule 144A VanEck and SolidX Bitcoin mutual fund … It looks and feels like a traditional ETF.”, they pointed out in their official description. However, this caused a stir in the community.
Especially because it is a mutual fund, not a legal ETF, as Jake Chervinsky emphasized. In addition, Chervinsky reminded the community that no Bitcoin ETF was approved by the U.S. regulators.
“This is misleading. The VanEck and SolidX * Bitcoin mutual fund is * not * an ETF. It is exactly the same as the Grayscale Bitcoin mutual fund launched almost six years ago.”he warned on his Twitter profile.
Although billed as an instrument similar to a Bitcoin ETF, it was unsuccessful. In reality, he only spent 4 BTC on his new mutual fund.
Although the demand from institutional investors appears to have increased, the SEC remains in existence without granting approval for a Bitcoin ETF.
At the beginning of the article, we explain the difference between an ETF and an ETN, which is crucial for understanding the following: Bitcoin ETNs are available on the market, but no Bitcoin ETFs.
Bitcoin Tracker One, which is listed on the Swedish stock exchange, has been available to investors since 2015 and is traded on Nasdaq Stockholm. This has been approved by the Swedish FSA and keeps BTC in custody with certificates guaranteed by Global Advisors.
However, Bitcoin Tracker One has no SEC acceptance, which shouldn’t come as a surprise. And remember, even if it looks like it is not an ETF.
As mentioned earlier, ETNs are debt securities that promise a certain pattern of returns. in this case the price of Bitcoin. And although they can achieve similar returns, the ETN carries a counterparty risk.
They are also available on the market Bitcoin ETP. The American manager WisdomTree in particular has relied heavily on cryptocurrencies with the start of a Bitcoin ETP.
The WisdomTree Bitcoin ETP (BTCW SW) offers investors “An easy, secure, and profitable way to familiarize yourself with Bitcoin while using the best traditional financial infrastructure and product structuring.”the company assured.
The 21Shares Bitcoin ETP (ABTC SW) is also available. It is important to note that ETP is a type of value that tracks the underlying values, the index or other instruments.