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Why do we need Bitcoin ETF?

The digital money market is waiting for the launch of an investment tool that can take the industry to a new level. Most of the news from the world of cryptocurrencies is due to the fact that the US Securities and Exchange Commission (SEC) is considering launching a Bitcoin ETF.

Changelly explains in plain language what it is, how it works in the field of cryptocurrencies and why everything can not be accepted.

How Bitcoin ETF Works

Exchange-Traded Fund (ETF) is an index fund whose shares are traded on a stock exchange. ETF is a type of security that acts as a certificate for a portfolio of stocks, bonds, commodities, or cryptocurrencies. The price of this security follows the index based on certain underlying assets.

An ETF provider submits an application to the Securities and Exchange Commission (SEC) to register a fund in the United States. The SEC classifies stocks of such funds as securities. Using ETFs, you can carry out the same operations as with stocks in exchange trading. Transactions with ETF shares can be completed throughout the trading day, and their prices may vary depending on the ratio of supply and demand, as well as the activity of market participants.

How ETF works

ETF stocks are more liquid than units of an investment fund. The latter usually applies in the country of establishment of such a fund. At the same time, exchange-traded investment funds can be traded on foreign markets. Margin trading is acceptable with ETFs.

Since ETFs are traded like stocks, the net asset value is not calculated daily, as is the case with an investment fund. Moreover, the market value of such assets may be higher or lower than the net asset value.

Why Do We Need Bitcoin ETF?

ETF is a familiar tool for representatives of the world of traditional finance. The popularity of such products is growing from year to year. Market participants do not need to open a wallet, register on the digital asset exchange, worry a...

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