What crypto newbies should know before buying Bitcoin ETF
You may have heard of Bitcoin ETF (Exchange Traded Funds) that have been surging recently as the popularity of Bitcoin engulfs everyday news and money.
What are ETFs?
In their purest form, Exchange Traded Funds are a type of investment. ETFs can be purchased through a brokerage and traded on any exchange, much like low-cost equities.
What is Bitcoin ETF?
Bitcoin ETFs are exchange-traded funds that track the price of bitcoin and allow investors to gain exposure to the commodity without actually holding it. In other words, those who invest in the fund possess a large number of Bitcoin ETF shares. The fact that Bitcoin ETFs are traded on standard exchanges rather than crypto platforms is one of the main reasons why people invest in them. This is a huge benefit for folks who aren’t familiar with cryptocurrencies but nonetheless want to acquire bitcoin.
Why are people investing in Bitcoin ETFs ? and Is it Worth Investing ?
Because the investment fund monitors the values of bitcoin and other market stocks, ETFs allow investors to diversify their portfolio and reduce investment risks. With the introduction of ETFs related to NFTs, blockchain enterprises, and Bitcoin Futures – which enable investors to bet on the crypto’s future price – new forms of exchange-traded funds have entered the public markets.
However, a Bitcoin ETF may not reflect real-time crypto returns. If the value of bitcoin rises by 50%, this does not always follow that the value of the BTC ETF will rise as well, especially if the ETF owns other assets. Another downside is that the ease with which Bitcoin ETFs may be used comes at the cost of expensive management costs.
ProShares, a Bitcoin-linked ETF, became the fastest ETF to reach $1 billion in assets. However, others have questioned whether Bitcoin Futures ETFs are viable. Since 2018, these ETFs have underperformed the BTC spot pair, according to Charlie Bilello, CEO of Capital Advisors.
Many people wonder if it is preferable to acquire bitcoin directly due to underperformance or inaccuracy. Bitcoin ETFs first appeared in the financial world in 2013, at a period when purchasing cryptocurrency was difficult. Several cryptocurrency exchanges now have user-friendly apps and are more people-centric in general. BitOasis, for example, allows clients with UAE bank accounts to buy bitcoin in the UAE with dirhams or Saudi riyals using local financing alternatives with no deposit fees.
How to Buy Bitcoin in India Legally?
Individuals interested in purchasing Bitcoins can do so without breaching any laws by following the steps below:
To begin, investors must provide basic documentation such as an Aadhaar card and a PAN card. Following that, they must complete the KYC procedure in its entirety.
To purchase Bitcoins, a person needs first submit a purchase order on a cryptocurrency exchange.
Investors can simply transfer the due amount from their bank accounts to the crypto exchange after placing an order. RTGS, NEFT, debit or credit cards, and other digital payment systems used for ordinary transactions are examples of alternative means of payment.
The next stage for investors is to safely store their Bitcoins in cryptocurrency wallets offered by the cryptocurrency exchange.
It’s worth noting that every transaction is recorded in a public ledger, and traded Bitcoins are identified by their wallet IDs rather than the identities of sellers or owners.
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