Spot Bitcoin transactions through exchange-traded funds (ETFs) seemed like a far-off fantasy in 2013 when the Winklevoss twins first applied for an ETF that would track the price of the cryptocurrency. Fast forward to 2024, and the United States Securities and Exchange Commission has finally approved the first batch of spot Bitcoin (BTC) ETF applications from a combination of crypto native and traditional financial institutions. However, these approvals have sparked questions about the differences between buying Bitcoin directly on an exchange and investing in Bitcoin ETFs.
To address these questions and more, Cointelegraph has released a new video called “Legends & Myths about Bitcoin ETFs Debunked.” This video aims to dispel the most common misconceptions surrounding Bitcoin ETFs.
One myth that the video tackles is the belief that owning a Bitcoin ETF is the same as owning actual Bitcoin. In reality, there is a distinction between the two. When you invest in a Bitcoin ETF, you are purchasing shares in the fund rather than owning the actual Bitcoin itself. This means that while you are exposed to the price movements of Bitcoin, you do not directly own the cryptocurrency. On the other hand, owning actual Bitcoin involves buying the digital currency and storing it in a digital wallet, giving you control over your private keys and coins.
Another myth that the video debunks is the idea that Bitcoin ETFs guarantee profits just like Bitcoin. In truth, neither investment offers a guaranteed profit. Both investing in a Bitcoin ETF and directly in Bitcoin carry their own risks, as the price of Bitcoin is highly volatile. It is important for investors to conduct their own research and consider their risk tolerance before making any investment decisions.
Additionally, the video addresses the misconception that Bitcoin ETFs are as volatile as Bitcoin itself. While Bitcoin ETFs are designed to track the price of Bitcoin, they may not perfectly mirror its fluctuations. Bitcoin is notorious for its high volatility, with significant price changes occurring within short periods of time. However, a Bitcoin ETF, being traded on a regulated stock exchange, may experience less volatility due to market mechanisms such as trading hours and the potential inclusion of other assets or strategies to mitigate risk.
For more information on the misconceptions surrounding Bitcoin ETFs, viewers are encouraged to watch Cointelegraph’s new YouTube video, “Legends & Myths about Bitcoin ETFs Debunked.”