Cryptocurrency exchange-traded funds (ETFs) aim to track the price or digital tokens that comprise cryptocurrencies.
ETFs have grown rapidly as an investment method since the mid-1990s because they have daily liquidity with low transaction costs.
What is a cryptocurrency ETF?
Invest in businesses that transform business applications by creating and using blockchain technology.
Invest in cryptocurrency investment products provided by asset managers such as Bitwise or Grayscale whose prices are backed by Ethereum (ETH), Bitcoin (BTC) and other cryptocurrencies.
ETFs are an extension of blockchain technology.
For example, the Bitcoin ETF was the first crypto ETF to attempt to track the price of BTC.
How do cryptocurrency ETFs work?
Simulating the price fluctuations of the underlying cryptocurrency.
Backed by physical crypto assets or synthetic variants such as derivatives.
Crypto investors own cryptocurrencies without incurring any expenses to own them directly.
BTC or ETH investors can gain exposure to more than one crypto asset, particularly outside of conventional securities markets.
What are the benefits of cryptocurrency ETFs?
Can invest in volatile assets.
Saves investors from costs such as custody charges, network and transaction fees.
The ETF provider is responsible for the security of the fund, always protecting investors from phishing attacks, cryptojacking or crypto robbery.
Investors can diversify their portfolios with crypto ETFs without making individual token payments.
Are cryptocurrency ETFs safe?
All parties involved in crypto ETF investment are subject to verification including their trading will be monitored to avoid market abuse or financing of illegal activities.
Crypto exchanges are issued by regulated companies and traded on regulated exchanges.
How to invest in cryptocurrency ETFs?
Investment brokers such as Fidelity, Robinhood or others provide a platform to open a trading account.
Determine what percentage of the total investment budget you want to invest in ETFs.
Enter the funds in the brokerage account and find the ETF you want to invest in. For example, if looking to invest in the ProShares Bitcoin Strategy ETF, type BITO (ticker symbol) into the search bar.
Place a crypto ETF market order to buy. Click buy and enter the maximum number of shares.
If intending to continue the investment portfolio, set up an automatic investment plan with the broker.
