Exchange-traded funds (ETFs) track the performance of an underlying asset and offer diversified exposure to various assets, providing liquidity and flexibility for traders. Bitcoin ETFs track the value of Bitcoin, providing traders with an opportunity to gain exposure to the cryptocurrency through traditional stock market exchanges.
These ETFs aim to simplify the process of trading in Bitcoin by offering a regulated and transparent investment vehicle, providing a more accessible way for traditional traders to participate in the Bitcoin market and enhancing adoption.
There are two types of cryptocurrency ETFs in the US — spot ETFs and futures ETFs — that allow traders to gain exposure to the price movements of Bitcoin. Spot Bitcoin ETFs directly hold Bitcoin as their underlying asset, meaning the fund owns and manages actual Bitcoin; the price of the ETF then tracks the price movement of Bitcoin and has several embedded mechanisms to ensure the prices remain correlated.
Futures Bitcoin ETFs hold futures contracts that normally have Bitcoin as the underlying asset. These contracts represent an agreement to buy or sell Bitcoin at a predetermined price on a future date.
