Last Updated on December 18, 2021
Similar in many ways to mutual funds, ETFs are bought and sold from owners throughout the day on stock exchanges while mutual funds are bought and sold from the issuer based on their price at day’s end.
They are designed to lessen complexity – you can invest using a cryptocurrency ETF in a bundle, which allows you to avoid the hefty fees of exchanges and wallets.
ETFs can provide more secure (citation needed,) reliable diversification across different cryptocurrencies and different companies involved in the underlying blockchain technology without managing wallets, keys, storage or exchanges and related crypto responsibilities. Plus you can leverage tax-advantaged growth if you buy a Bitcoin ETF in a tax-advantaged account, where you can’t directly buy Bitcoin.
The SEC has approved the first U.S. Bitcoin ETF – ProShares Bitcoin Strategy ETF (BITO.) ProShares has an advantage from being first to market. That said, this ETF does not directly buy Bitcoin, instead they buy Bitcoin futures.
From the website: “ProShares Bitcoin Strategy ETF (BITO) is the first U.S. bitcoin-linked ETF offering investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way. The Fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts.”
ProShares ETFs cannot be purchased directly from ProShares. They are available for purchase on exchanges, much like stocks—and can be bought and sold throughout the day whenever the exchange is open.