Why Some Crypto Investors Are Reluctant To Invest in Bitcoin Futures ETFs
The price of Bitcoin has risen sharply recently, breaking beyond the $66,000 barrier for the first time, and one of the main reasons for this is that the New York Stock Exchange successfully launched the first Bitcoin futures exchange-traded fund trading under the ‘BITO’ ticker. However, despite the popularity of the ProShares Bitcoin Strategy ETF, some crypto investors have expressed a desire to invest directly in Bitcoin rather than through the Bitcoin ETF. BigONE investigated the reasons and discovered that one of the most recent hot topics is, “When you can buy Bitcoin, why should you invest in a Bitcoin ETF?”
What is a Bitcoin futures ETF?
The Bitcoin futures ETF is the first of many to be approved by the US Securities and Exchange Commission (SEC). Its approval allows non-crypto currency investors to purchase Bitcoin without needing to open a separate cryptocurrency investment account. ProShares CEO Michael L. Sapir confirmed: “BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider and creating a bitcoin wallet.” BigONE believes therefore that if you are thinking about investing in a Bitcoin ETF, you should understand the difference between buying a Bitcoin futures ETF and buying Bitcoin directly.
As we all know, futures are a type of financial derivative; it is a contract to obtain value from another asset. So, for example, rather than owning Bitcoin, the Bitcoin futures ETF is essentially an agreement to buy Bitcoin at a fixed point in the future. “The futures-linked fund is subject to rollover risk, meaning that when it periodically closes positions in the futures contracts it holds, it can find itself, as is the case now, repurchasing new batches of future-dated contracts for more money. The situation, known as “contango,” eats into profits,” confirmed a recent report in Fortune. So, if you’re thinking about buying Bitcoin ETFs, make sure you know everything there is to know about futures trading.
Why do some investors buy Bitcoin directly rather than Bitcoin ETF?
Bitcoin is also referred to as “digital gold” due to its ability to store value. Bitcoin can account for up to 60% of many early investors’ investment portfolios; selecting an excellent cryptocurrency exchange is the best way to get started if you are a first-time Bitcoin investor. All you need do is apply on a reputable cryptocurrency exchange, such as BigONE. The exchange creates an account and requests basic personal information as well as ID photos for KYC verification. After the verification process is completed, funds can be deposited to purchase Bitcoin. BigONE recommends that you take the time to understand the fee structure and security guarantees of cryptocurrency exchanges before purchasing Bitcoin. This allows you to keep investment costs under control while also ensuring the safety of your assets.
Before purchasing Bitcoin for the first time, you should be aware of the following:
The Bitcoin market is volatile
All cryptocurrency investors must be prepared for market volatility, and Bitcoin is no exception, as it is easy to gain 10% or even 20% in a single day, and vice versa.
Making long-term investments is one way to protect yourself from volatility. For example, if you buy Bitcoin intending to hold it for a long time, you will not be affected by daily price fluctuations. In other words, when the cryptocurrency has just reached a new high, it is critical to enter the market with caution because purchasing Bitcoin at its peak is not a wise decision unless you are looking at it with a long-term mindset. BigONE reminds all investors not to invest rashly and ensures that your emotions do not influence your purchase decision. The best advice is to carefully weigh up the pros and cons of buying Bitcoin for the long term and make sure you have a well thought-out crypto investment plan from the outset.
Cryptocurrency is a risky investment
Cryptocurrency is becoming more popular, but that does not mean it is risk-free. On the contrary, cryptocurrency has always been regarded as a high-risk investment. Therefore, BigONE reminds investors only to invest what they can afford to lose and carefully plan the proportion of cryptocurrency in their overall investment portfolio.
Research your proposed cryptocurrency investments
Choosing to buy or not buy based on rumors, as with any investment, is not a good idea. Nobody understands your financial situation or risk tolerance better than you. Research and education will assist you in making investment decisions that are right for you. Try to grasp the fundamentals of blockchain technology and how cryptocurrency differs from other investments. All investments have varying levels of risk and return that are appropriate for different people’s needs.
Buying Bitcoin for the right reason
Getting started with cryptocurrency investment can be a little intimidating, but it doesn’t have to be. There is a wealth of information available for learning and research on the Internet. In addition, as we stated previously, there are several ways to reduce or manage the risks involved. Above all, you should buy Bitcoin for the right reasons. Don’t invest just because everyone else is or because you’re afraid of missing out. Instead, make sure it is part of your investment strategy and that you believe in its long-term potential. Despite its benefits, investing solely in Bitcoin is not the best strategy for a sound cryptocurrency portfolio. BigONE believes that adding diversity to your investments is the best option, to maximize returns and minimize risks. A well-diversified portfolio consists of crypto assets that perform independent of each other, so if one decreases in value others are not necessarily adversely affected.
