BlackRock's BitcoinETF How does it work?

Essentially, Bitcoin ETF investors are buying shares or units of a fund that is used as an underlying asset. ETFs are built to use Bitcoin, giving them the option to invest in Bitcoin without having to maintain and maintain a digital wallet or currency exchange. digital

-Bitcoin ETF offers a regulated investment structure and can track Bitcoin price changes within the confines of financial markets. and also have access to liquidity and transparency

-Bitcoin ETF will hold a basket of more than 1 Bitcoin unit, so it has some advantages such as diversification. It also allows daily buying and selling of stocks. The same applies to securities traded on other stock exchanges.

-Bitcoin ETFs may vary depending on jurisdiction and legal framework. Before deciding to invest Investors should carefully analyze various aspects, including fees. Tracking accuracy and ETF custodian arrangements.

After BlackRock applied for Spot Bitcoin ETF on June 15 of last year, The filing coincides with a lawsuit filed by the US Securities and Exchange Commission (SEC) against Coinbase and Binance, the exchanges. Top cryptocurrency company BlackRock's iShares is seeking approval for the iShares Bitcoin Trust, a Bitcoin ETF.

Bitcoin ETFs use the same features as Spot Bitcoin ETFs in that they aim to closely track the price of Bitcoin, but there are noticeable differences in their approach. First, ETFs that use this feature hold month-ahead futures contracts. The first thing that must be affected each month causes additional costs. In addition, futures contracts have an expiration date. This requires continuous management and position changes by the portfolio manager. To prevent market manipulation Futures exchanges such as the Chicago Mercantile Exchange (CME) also impose position limits on contracts. Portfolio managers of Bitcoin ETFs that use futures must purchase longer-dated futures contracts to comply with restrictions to ensure they can continue to position their funds within a regulated framework. and avoid risks from concentration

However, these variations affect the way the price of Bitcoin is tracked and can cause changes in the spot market. For example, the accuracy of a contract tracking the spot market decreases as time passes to its expiration date. Compared to current options, the Bitcoin ETF offered by BlackRock is expected to provide better price tracking and may have lower fees. BlackRock's competitors, such as ProShares Bitcoin Strategy ETF and Grayscale, charge fees of 95 basis points and 2%, respectively.

Here's how the launch of the BlackRock Bitcoin ETF will affect cryptocurrencies:

1. Increasing acceptance of digital currencies

2. Impact on liquidity

3. Interest in regulations and investor protection

4. Market risk and volatility

5. Ripple effects on other currencies

However, investing in various funds is considered another risk that investors must study the conditions and details each time before investing.