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What is Bitcoin ETF?

  • Thread starter Thread starter Nomad
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Nomad

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By this time probably everyone has heard of Bitcoin ETFs. Recently, the United States Security Exchange Commission (SEC) approved Bitcoin ETFs. All 11 companies that applied for Bitcoin ETFs were approved. But what exactly is Bitcoin ETFs?

Well, I understand ETFs in the context of stock market. ETFs or Exchange Traded Funds are investment pools just like Mutual Funds where fund manager uses your money to invest in various assets, you, the investor do not have to make investments on your own. The only difference is while Mutual Funds cannot be traded on stock exchanges, ETFs can be traded on stock exchanges just like individual stocks. But what are Bitcoin ETFs, how do they work?
 
I don't fully understand it, but from what I read on the matter it allows investors to gain Bitcoin without having to own it themselves. I think the ETF holds the Bitcoin for the people instead of them having it in a secure wallet. That's what I got from it. Though I'm probably wrong.
 
It's basically an index fund where you invest in Bitcoin in spot but in the form of a contract, someone manages that Bitcoin in spot for you and you have direct exposure to the price of the asset, they're BTC custodian services really.
 
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