Are We Ready For The Bitcoin Exchange Traded Fund?

A thrust for the Bitcoin Exchange Traded Fund (ETF) to be put in place has been going on without much accomplishment. A closed-end fund (CEF) seems to be the only answer at the moment. The CEF has the potential of opening up a for cryptocurrency dealers in some markets, which is good news for all of us. More awareness needs to be conducted about the bitcoin before we can see EFT come into use.

ETF Innovation Bitcoin Fund

In America, the ARK has an ETF innovation bitcoin fund that will make it possible for an investor to transact in financial securities, which get tied to the bitcoins without having to own bitcoins. Traders have the option of gaining access to the cryptocurrency via the Bitcoin Investment Trust, which is an investment medium allowing investments in Bitcoins. It gets its value from the Bitcoin price. After holding for one year, the investment Trust liquidates into the GBTCs where it disposes to investment Funds.

The GBTCs wield a superior premium over bitcoins, and they offer higher benefits when compared to purchasing bitcoins directly hence a better investment. The GBTC presents investors with amplified ownership. The shares are publicly quoted and held in the tax-advantaged accounts like IRA.

Similarities Between CEF And An ETF

CEF as an investment structure allows traders to invest in portfolio securities with shares tradable in open markets. The CEF raise their capital from Initial Public Offering. The difference with the other funds is, capital in the CEF doesn't flow on a regular basis. Shares aren't traded on a daily basis; it is only done for exchange on the market to determine its price.

The CEFs run like the ETF yet they aren't ETFs. The CEF can be leveraged, which has the chances of making more profits hence beneficial to the net asset value. Trading on exchanges can be carried out during the day. Both of them provide for the distribution of income and capital gains. The most significant difference is the fact that the EFT is protected against any considerable deviation from the net asset value whereas the CEF doesn't have such a feature. The CEF needs to be managed actively but the ETF can track the index performance.

Regulated Environment

The bitcoin is a fast growing currency, which needs a regulatory framework to enable the bitcoin ETF to be approved. A controlled environment where cryptocurrencies are in use will open up markets to a broader clientele. It is about time the bitcoin became a financial security. I look forward to the day when bitcoin will become a currency. Cryptocurrencies have a better future than the fiat currencies. With the involvement of many financial players, we should expect more liquidity in the markets. Such a move will bring about speculators for the bitcoin fund who will cause an excitement prompting an increase in price.

The entry of myriad traders in cryptocurrencies has seen the birth of regulated exchanges all over the world, which makes me think that we are ready for an Exchange Traded Fund. What do you think? Drop me your comment.