More and more investors are also interested in Bitcoin. Given the strong price development of the cryptocurrency, this is not surprising either. The question of a Bitcoin ETF comes up again and again. In the following article we will discuss what this is all about.
Bitcoin ETF: A new way to profit from the Crypto Coin
More and more investors are also interested in Bitcoin in Germany. Given the strong price development of the cryptocurrency , this is not surprising either. The question of a Bitcoin ETF comes up again and again. In the following article we will discuss what this is all about.
- Bitcoin ETFs are an easy way to benefit from the movement in the price of crypto coins
- However, at the moment there are only those ETFs that are allowed to invest in BTC futures
- This means that the price development cannot be mapped 100%
- Bitcoin still has a very large price potential
What is a Bitcoin ETF?
- An ETF is an exchange-traded index fund
- Basically, ETFs are therefore funds
- However, they can usually be bought and sold on the stock exchange like stocks
- Because ETFs are so easy to trade, this type of fund is very popular with many investors
- Most often, ETFs map the development of stock indices
- However, Bitcoin ETFs now also exist
- However, these ETFs do not buy Bitcoins directly, only Bitcoin futures
- Another way to trade cryptocurrencies is to use a CFD broker
ETF on Bitcoin
The trading ETF is becoming increasingly popular among investors. Because this makes it easy, for example, to benefit from the development of stock indices in a simple way. Popular indices are, for example:
- Dow Jones Index
- Nasdaq index
In order to show the performance of such an index without an ETF, one would have to buy all stocks contained in the index.
An ETF makes this a lot easier. In this way, the fund buys the stocks contained in the index in the correct ratio. As an investor, you automatically benefit from price movements when you buy the ETF.
With ETFs being so popular, it’s not surprising that many investors are also interested in Bitcoin ETFs. Because this makes buying and selling the cryptocurrency much easier.
Bitcoin ETF and Bitcoin ETN now actually exist . However, there is one special feature to note here: So far, there are only ETFs that trade Bitcoin futures. Below we discuss what this means.
Buy Bitcoin ETF
Financial service providers have been trying to bring Bitcoin ETF onto the market for a long time. For a long time the problem was to convince the US Securities and Exchange Commission of this plan.
It is now actually possible to buy Bitcoin ETF. This includes in particular the ProShares Bitcoin Strategy ETF.
As already mentioned, the currently available ETFs do not invest directly in Bitcoin. This means that no bitcoins will be bought. Rather, the ETF invests in Bitcoin futures .
Trading in futures
Futures are forward contracts. These are used by investors, for example, to trade commodities. It is also said here that a futures contract is derived from a certain underlying asset. For this reason, the price of the futures contract is also based on the underlying.
Popular features are for example:
- Oil futures
- Gold futures
- Wheat futures
We explain how trading in futures works using the following example: A company needs oil in three months. The oil price can often fluctuate very strongly, for this reason there is a risk for the company that it will have to buy the oil at a significantly higher price in 3 months.
To prevent this, you can already buy an oil future : In three months, the company will receive the oil it needs at a predetermined price. For the company, this has the advantage that it receives planning security.
BITCOIN ETF AND BITCOIN FUTURES
Bitcoin futures have also existed for some time. These are based on the price development on the Bitcoin price. However, there may be deviations: There are futures contracts with different terms. The further the futures contract expires, the more the actual price usually deviates from the current Bitcoin rate .
Overall, Bitcoin futures are a great way to benefit from Bitcoin’s price movements. It is not necessary to actually purchase cryptocurrencies on a crypto exchange or on a digital marketplace.
As an investor, one should note the following peculiarity: As soon as a futures contract becomes due, no actual cryptocurrencies have to be exchanged. Rather, the compensation takes place in money.
Here is an example: Assuming you buy a Bitcoin futures price of 60,000 USD, you mean that the prices of the cryptocurrency will increase in the future. The futures contract is due after three months. If the Bitcoin has risen to USD 70,000 at this point, it means that you have made a profit of USD 10,000.
However, if the Bitcoin is quoted below 60,000 USD, this means a loss. In summary, this means:
- Bitcoin ETFs exist today
- However, these ETFs do not trade the cryptocurrency directly
- Rather, they invest in Bitcoin futures
- Futures are forward contracts
- The price development of the futures is based on the price of Bitcoin
Vaneck Bitcoin ETF and Bitcoin ETF Comdirect
It is a success that the US Securities and Exchange Commission approved BTC futures. As I said, there are now ETFs that trade with exactly these Bitcoin futures.
In addition, attempts have been made to develop such ETFs that can also buy and sell Bitcoin directly.
For example, approval for the Vaneck Bitcoin ETF was applied for. However, the US Securities and Exchange Commission has now decided that there will be no approval in this case.
Experts had already suspected this result. Because the head of the SEC had already said several times that he preferred a solution with Bitcoin futures.
Advantages and disadvantage of Bitcoin ETF
Bitcoin ETFs that invest in BTC futures are very popular with investors. The first ETFs were able to show a market capitalization of USD 1 billion after just a few trading days.
However, futures also have disadvantages. As I said, the prices are based on the base values. If the price of the bitcoin rises, this will usually also apply to the BTC futures. However, there may be deviations in the rates.
In addition, futures contracts always have an expiration date. As soon as this is achieved, new futures contracts must be bought. This comes at a cost. Ultimately, this means that the profits for investors in the ETF are reduced.
In addition, there are many investors who would like to benefit from the actual price movements of Bitcoin. As I said, you don’t have this option with the previous Bitcoin ETFs.
However, it cannot be ruled out that such ETFs, which are allowed to trade directly in crypto currencies , will be approved in the future. Until then, however, investors also have numerous other options to benefit from Crypto Coins.
In summary, this means:
- The US Securities and Exchange Commission has approved Bitcoin Futures
- This also applies to Bitcoin ETFs that invest in Bitcoin futures
- On the other hand, ETFs that can trade directly with crypto coins were rejected
- However, this could change in the future
More ways to trade the Bitcoin
As I said, Bitcoin ETFs already exist today. However, these are only allowed to trade with Bitcoin futures.
Investors who want to buy and sell cryptocurrencies directly have the following two options:
- Digital marketplaces
- Crypto exchanges
Digital Marketplaces for crypto coins
After Bitcoin came onto the market in 2009, the first digital marketplaces quickly developed. You could buy and sell cryptocurrencies on it.
The main disadvantage of such marketplaces is that transactions are often slow. Because the operator of the platform only provides the infrastructure. The individual transactions, on the other hand, take place directly between the buyers and the sellers.
For this reason, many investors nowadays prefer crypto exchanges to buy and sell BTC. Because there the transactions take place directly via the operator of the exchange.
There are now also online brokers where you can trade crypto currencies. Even with these, however, it is necessary to have a crypto wallet. With these there is always the risk that hackers will gain access to them.
- In order to trade cryptocurrencies, investors have several options
- For example, digital marketplaces, crypto exchanges and online brokers come into consideration
- In this case you need a crypto wallet to store the crypto coins
- However, you also have other options to benefit from the Bitcoin exchange rate
Use a CFD broker as an alternative to a Bitcoin ETF
Experience has shown that many investors are not interested in actually owning the crypto currencies. As I said, there is always the risk of how to keep the Crypto Coins most securely.
If you only want to benefit from the price movements of the crypto currencies, you can also use a CFD broker , for example . So nowadays there are CFDs that show the price development of the BTC. The purchase is very easy here. Then the cryptocurrencies are on the trading account. There is no difference to DAX CFD, Gold CFD or Oil CFD, for example.
The best providers can be found very easily with our broker comparison.
Bitcoin ETF course
As I said, many investors are interested in Bitcoin ETF mainly because they want to benefit from the price movements of the crypto coin.
For this reason, it makes sense to take a closer look at the price development of Bitcoin. Afterwards, we also provide a forecast about the future development of the price.
At the beginning of 2017, Bitcoin was still trading at USD 925. In the months that followed, the share price rose very sharply. At the end of the year, the cryptocurrency was then quoted at almost USD 20,000. Bitcoin had therefore managed to gain around 2,000% within a year.
After prices rose so much, it wasn’t uncommon for a correction to come after that. This ensured that the prices continued to fall in 2018. The low was reached here at a price of 3128 USD.
At this point you can already see how strong the price movements in Bitcoin can be. However, this is also the main reason why so many investors are interested in Bitcoin ETF at the moment.
Bitcoin can develop very well
The low prices were used by many investors to get into Bitcoin cheaply. The strong demand then ensured that the courses could develop very well in the following months. In this way, the area of over USD 13,000 could be started again.
After that, however, the correction continued. There was then a sharp slide in 2020 due to the Corona crisis. The global lockdown ensured that prices fell to $ 9,200. However, this area was again used by many investors to buy BTC. Since then, the courses have developed extremely well.
Bitcoin keeps reaching new all time highs
Meanwhile, Bitcoin has managed to soar to over USD 60,000. This means that not only the previous all-time high of around USD 20,000 could be reached again. In fact, prices have tripled again since then.
Many analysts assume that the prices could also rise to over USD 100,000. For this reason, too, Bitcoin ETFs are interesting for many investors.
In summary, this means:
- In 2017, Bitcoin was still available for less than USD 1,000
- Just twelve months later, the cryptocurrency was already trading at just under USD 20,000
- Then there was a strong correction
- In the meantime, however, the upward trend has continued
- The Bitcoin even managed to soar to over USD 60,000
- Analysts assume that the Crypto Coin could even rise to over USD 100,000
How will the Bitcoin price develop in the future?
Many investors are wondering how much potential Bitcoin still has. This is also important, for example, if you plan to invest in Bitcoin ETF.
One should consider the following: The supply of bitcoins is limited. The developers of the cryptocurrency have determined that there can never be more than 20 million coins. By doing this, they want Bitcoin to be subject to inflation.
On the other hand, however, one can observe that the demand for Bitcoin continues to increase. A constant supply and an increasing demand tend to cause prices to rise. This is also important for investors planning to buy a Bitcoin ETF.
The demand for Bitcoin is increasing
Nowadays, the Bitcoin is also used by investors to diversify their portfolios. In addition, the cryptocurrency is becoming increasingly popular with private investors.
Above all, they hope to be able to benefit from rising BTC prices.
Bitcoin can also be used to protect against inflation, for example. Because the currency depreciation continues to increase. The aid programs due to the corona pandemic are primarily responsible for this: the central banks have put a lot of money into circulation to support the economy.
The disadvantage of this policy is that the money like Euros and USD tend to be worth less.
To protect themselves from this, many investors are already using BTC today. This is another reason why many private investors are interested in Bitcoin ETF.
The advantages and disadvantages of Bitcoin ETF
Finally, we have summarized the advantages and disadvantages of Bitcoin ETF again:
- Easy way to trade cryptocurrencies
- The demand for Bitcoin continues to grow
- Due to the limited supply, this tends to lead to rising prices
- So far, however, there are only Bitcoin ETFs that are allowed to trade with futures
- In this way, the price development cannot be mapped 100 percent
- Even a Bitcoin ETF does not protect you from the strong fluctuations in the price of crypto coins
Practice trading the Bitcoin
As I said, there can often be strong price movements with Bitcoin. For this reason, many investors are interested in Bitcoin ETF.
Before investing real money, however, it is usually better to first try out trading on a demo account. Because on it you get virtual capital from the brokers. This can then be used, for example, to test different strategies when trading the crypto currency.
The demo account is also a very good way to try out trading with other financial instruments. These include in particular:
- Stock indices
- Precious metals
With many brokers it only takes a few minutes to open such a free demo account.
Conclusion: Bitcoin ETFs offer opportunities for investors
In the context of this article, we have dealt very extensively with Bitcoin ETF. It has been shown that the US stock exchange regulator has now approved Bitcoin futures. These are futures contracts.
As an investor, you can, for example, also use ETFs that trade such Bitcoin futures. The price development is based on the Bitcoin price.
Another way to trade cryptocurrencies, for example, is to use a CFD broker. There you have the advantage, for example, that you get a leverage from the broker.
Trading can be tried out very well on a demo account. The best providers can be found very easily with our CFD broker comparison .