When I go through the term ETFs I didn't find this tricky at all to understand But when I looked upon BTC ETFs,I thought to investigate fully about and made my pen down for necessary details that somebody should know before making an investment in both.Also keep in mind that buying a Bitcoin ETF is far different from buying a Bitcoin.
Lets understand the terms👇
ETF...means exchange traded funds
[funds/securities that someone can trade (buy/sell)through an exchange]
BTC ETFs ....it means if someone buys BTC-ETFs he is actually not buying/owing BTC itself but a financial product through which investor would trade BTC with it's full price momentum . ETFs are available on different exchanges.
Even after understanding the terms someone could feel tangled to decide whether or not to buy the Bitcoin ETFs/BTC. Some crypto analyists still say that it's better to buy Bitcoin than a Bitcoin ETF.
SEC approved BTC-ETFs in Jan 2024, after that a hype in BTC'price is clearly seen and BTC made it's new all-time-high. In that time, exchanges managed to collect more than $30 billion regarding ETFs.
Benefits and downsides of BTC versus BTC ETFs
As everybody knows Bitcoin is the most popular and valuable crypto that needs a protected cold wallet or a paper wallet to store in with high security. BTC-ETFs does need to setup a wallet with specific exchange.
When you buy bitcoin ,you actually owned it. In BTC-ETF' case, investor is buying just an exposure of BTC'price there he can totally track all the aspects of BTC.
Cold or paper wallet always requires the private keys, which are unique codes. If the private keys are lost,no one can recover their Bitcoin.On the other way trusted exchanges perform there duty to protect the investor's assets.
If SEC or any government concerned authority makes changes in BTC legal identity it will effect your ownership directly.On daily bases there are different news roaming around about it's legality.In other case issuers of BTC-ETFs are responsible to decide what to do with your BTC.
Cyber security is must for both cases in first case you are responsible for any hack and in other case exchanges are responsible for security hacks.So choosing an exchange with high alerts and which is vigilant against cyber hacks,is mandatory.
Focus of BTC is on both as crypto currency and commodity if buying starts with BTC (as already starts in many cases) if you own btc you can buy ,and if you own BTC ETFs you need to convert your etf to BTC and then make a buy.In this case ETFs looks complex.
BTC-ETFS are regulated , protected and transparent other way BTC is always in need of necessary corrections.
Custodial fees would be different in both of cases as in BTC-ETF' case exchanges would charge there management fees too in give and take scenario.
Price of BTC versus BTC ETFs tracks as 1:1. So some analysts say why to buy Bitcoin directly just keep it simple and buy the ETF, as there is always a need of updation with time and ETF is an update. According to analyst,this time it is 1:1 but game can change too it could be underperforming or over performing.
So Keep in mind that BTC buying is to own it directly and BTC-ETFS are to take limited control on it.
