An ETF, or an exchange-traded fund, is a financial instrument used to track the performance of traditional assets — here we list the best options for Bitcoin and crypto ETFs currently on the market
Investment firms have started to offer ETFs products for Bitcoin as the world’s leading cryptocurrency has earned its position as something that’s here to stay and, thus far, proved its critics wrong on the issue of its longevity. The US Securities and Exchange Commission (SEC) has shown some hostility towards Bitcoin in the past, having rejected numerous Bitcoin ETFs since 2017, and is unlikely to endorse a Bitcoin ETF until crypto has further proven itself to the committee’s satisfaction
As Bitcoin and cryptocurrencies are increasingly appearing on investors’ radars from traditional trading backgrounds, products such as ETFs will encourage them to invest in cryptocurrencies without contending with wallets, withdrawals, deposits and the volatility of the crypto markets.
However, concerns over the price-manipulation of digital assets has prevented a fully-regulated product from emerging thus far.
Here we list the top 3 Bitcoin ETFS from 2020 that we think could prove their worth in 2021.
Bermuda Stock Exchange ETF
The world’s first Bitcoin ETF product was launched in Bermuda. After the US SEC repeatedly blocked applications for Bitcoin ETFs, Bermuda’s stock exchange (BSX), launched its exchange on 18 September 2020.
The fund tracks a “portfolio of cryptocurrencies and blockchain-based assets that are tracked by the index.”
Reportedly up to 3 million Class E shares will be available to trade, although which cryptocurrencies are tracked by the fund has not been made clear. Shares will cost $1,000 each — so this may not be suitable for those who do not have the capital to take the risk and invest in the fund.
The CEO of Hashdex, Marcelo Sampario, claimed that Bermuda was selected thanks to its friendly regulatory environment for cryptocurrencies and that the ETF will, “speed up the entry of institutional investors in this segment. It is a trend that increasingly becomes concrete.”
Gibraltar Stock Exchange
The other recent addition to the potentially growing list of Bitcoin ETF’s is one from Gibraltar’s stock exchange. Called “The Bitcoin Fund”, this ETF is aimed at established investors based in Europe, according to the BTC Times.
First launched in Canada, where the ETF is currently trading, the fund will now be a source of investment for European investors concerned with the current unstable global economy and rising inflation as Covid continues to have an impact on the global economy.
In addition, the fund eases the entry of investors wanting to expose some of their portfolios to the growing cryptocurrency market without having to purchase Bitcoin, navigate hardware wallets, or handle private and public keys.
3iQ, the issuer of the fund to the Gibraltar Stock Exchange, claims that the ETF is one of the world’s first regulated Bitcoin ETFs to arrive at a fully regulated exchange in Europe. The CEO of 3iQ, Fred Pye, said that this opens the doors up to sovereign wealth funds and pension funds who wish to access a fully-regulated Bitcoin product that offers some security for investments outside of the wild west of the crypto market.
Pye added that, “Being listed on the Gibraltar Stock Exchange extends the reach of The Bitcoin Fund within the burgeoning European digital assets market, and continues the groundswell of momentum that has defined 3iQ’s exciting progress during the first half of 2020.”
Greyscale’s Investment Trust
Although no strictly an ETF, this fund deserves a mention. Greyscale has made headlines in recent weeks for its buying up of crypto to add to its reserves and AUM (assets under management)
Greyscale currently holds a staggering $10.4 billion AUM in crypto holdings — just over a year ago in December 2019, the firm only held $1 billion in AUM to put this in perspective.
Some of these gains have been due to increases in the price of Bitcoin, but the accumulation made by the firm is still impressive to say the least.
Investing in the trust means that investors can benefit from a security rather than direct exposure to the crypto markets.
Of its offered products, Grayscale Bitcoin Trust (GBTC) remains the most popular for now.