Myths surrounding Bitcoin ETFs
In 2013, when the Winklevoss twins filed for an ETF that tracks the value of the cryptocurrency, transactions for the spot Bitcoin were a distant dream.
10 years later, in 2024, the United States Securities and Exchange Commission approved the first Bitcoin (BTC) ETF applications from a mix of crypto-native and traditional financial institutions. However, their approval raised questions about the difference between buying Bitcoin on a peer-to-peer exchange and investing in Bitcoin ETFs.
What is the difference between Bitcoin ETFs and Bitcoin ownership? Like Bitcoin, do ETFs offer profits? All these questions and more in Cointelegraph's new video, Legends & myths about Bitcoin ETFs Debunked, which debunks the most common misconceptions about Bitcoin ETFs.
Myth: A Bitcoin ETF is the same as owning actual Bitcoin.
In terms of ownership, Bitcoin and ETFs are different. When you invest in a Bitcoin ETF, you are buying shares in the fund, not the actual Bitcoin. This means you are exposed to Bitcoin price movements without directly owning it.
Owning a real Bitcoin involves buying the digital currency directly and storing it in a digital wallet. This way, you control your private keys and, therefore, your coins.
Fact: A Bitcoin ETF tracks the price of Bitcoin but does not give you actual Bitcoin ownership.
Myth: Bitcoin ETFs guarantee profits just like Bitcoin
Both investments do not offer guaranteed returns. In fact, the price of Bitcoin is so volatile that investing in a Bitcoin ETF or directly in Bitcoin carries risk.
Remember, a Bitcoin ETF mimics the price movements of Bitcoin, which means its price can fluctuate based on market conditions. Investors should do their own research and consider their risk exposure before investing in Bitcoin ETFs or Bitcoin.
Reality: Bitcoin ETFs, like all investments, come with risks, and there is no guarantee of profits.
Myth: Bitcoin ETFs are as volatile as Bitcoin.
While Bitcoin ETFs are designed to track the price of Bitcoin, they may not accurately reflect its fluctuations.
Bitcoin is known for its high volatility, which can cause large price changes in a short period of time. On the other hand, a Bitcoin ETF, being traded on a regulated stock exchange, may experience lower volatility through market strategies such as trading hours and the possibility of reducing risk by incorporating other assets or strategies.
Fact: While Bitcoin ETFs track the price of Bitcoin, their volatility can vary due to factors such as management fees and tracking errors.
Learn more about the misconceptions surrounding Bitcoin ETFs in Cointelegraph's new YouTube video, Legends and myths about Bitcoin ETFs Debunked.
