In 2013, the Winklevoss twins made a groundbreaking move by submitting the first-ever application for an exchange-traded fund (ETF) that would track the price of Bitcoin. Fast forward to 2024, and the United States Securities and Exchange Commission has finally approved a series of ETF applications for spot Bitcoin (BTC) from both crypto native and traditional financial institutions. However, these approvals have raised questions about the differences between buying Bitcoin through peer-to-peer transactions on an exchange and investing in Bitcoin ETFs.
To address these questions and debunk common misconceptions about Bitcoin ETFs, Cointelegraph has released a new video titled “Legends & Myths about Bitcoin ETFs Debunked”. This video provides comprehensive answers to various inquiries surrounding the topic.
One of the most common misconceptions is that owning a Bitcoin ETF is equivalent to owning actual Bitcoin. However, this is not the case. When you invest in a Bitcoin ETF, you are actually purchasing shares in the fund, not the underlying Bitcoin itself. This means that while you are exposed to the price movements of Bitcoin, you do not directly own the digital currency. On the other hand, owning actual Bitcoin involves buying the cryptocurrency directly and storing it in a digital wallet, giving you control over the private keys and, subsequently, your coins.
Another myth is that Bitcoin ETFs guarantee profits, just like investing in Bitcoin itself. In reality, both investments come with risks, and there is no guaranteed profit. The price of Bitcoin is highly volatile, and this volatility extends to Bitcoin ETFs, as they mimic the price movements of Bitcoin. Before investing in either Bitcoin ETFs or Bitcoin, it is crucial for investors to conduct their own research and consider their risk tolerance.
Lastly, it is commonly believed 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 infamous for its high volatility, resulting in significant price changes 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 possibility of incorporating other assets or strategies to mitigate risk.
To learn more about the misconceptions surrounding Bitcoin ETFs, watch Cointelegraph’s new YouTube video titled “Legends & Myths about Bitcoin ETFs Debunked”.