What is a Bitcoin ETF?

A Bitcoin exchange-traded fund (ETF) is a financial instrument that offers investors exposure to the Bitcoin market. Specifically, a Bitcoin ETF allows an investor to potentially make (or lose) money based on daily fluctuations in the price of Bitcoin.

Unlike the asset itself, Bitcoin ETFs trade on traditional stock markets or exchanges and are intended for mainstream investors who don’t wish to purchase Bitcoin directly.

What is the difference between Bitcoin and a Bitcoin ETF? There are several characteristics that make them different. These include:

Ownership: Investors own shares in the fund that holds Bitcoin, rather than possessing the Bitcoins themselves in a wallet.

Trading: Today, the crypto market is open 24 hours a day, seven days per week. This is different from traditional markets, which are open during certain times of the day and week. Bitcoin ETFs are subject to these trading time schedules.

Fees: Like other ETFs, Bitcoin ETFs feature management fees charged by those who oversee the fund. Holders of Bitcoin only pay fees when making a transaction. Proponents of Bitcoin ETFs argue that these products provide a path for mainstream adoption of Bitcoin that avoids some of the security and technical pitfalls of cryptocurrency ownership.