How do ETFs that sell bitcoin work?

3 answers

• Dec 21, 2021 · 3 years ago
  ETFs that sell bitcoin work by pooling investors' money to buy and hold bitcoin. The ETF then issues shares to investors, who can buy and sell these shares on a stock exchange. This allows investors to gain exposure to bitcoin's price movements without having to deal with the complexities of owning and storing actual bitcoin. The ETF's value is typically tied to the price of bitcoin, and investors can profit if the price goes up. However, it's important to note that the value of the ETF can also go down if the price of bitcoin drops.
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• Dec 21, 2021 · 3 years ago
  When you invest in an ETF that sells bitcoin, you're essentially buying a share of a fund that holds bitcoin. The fund manager takes care of buying and storing the bitcoin, while you can easily buy and sell shares of the ETF on a stock exchange. This makes it convenient for investors to gain exposure to bitcoin without the need for a digital wallet or dealing with the security risks associated with holding bitcoin directly. It's important to do your research and understand the fees and risks associated with investing in these ETFs before making any investment decisions.
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• Dec 21, 2021 · 3 years ago
  ETFs that sell bitcoin, like the ones offered by BYDFi, work by using a custodian to hold the bitcoin on behalf of the fund. The custodian ensures the safe storage and security of the bitcoin holdings. Investors can then buy and sell shares of the ETF on a stock exchange, just like they would with any other stock. This allows investors to easily gain exposure to bitcoin's price movements without the need to directly own and manage the bitcoin themselves. However, it's important to note that investing in ETFs still carries risks, and the value of the ETF can fluctuate based on the price of bitcoin and other factors.
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