Bitcoin exchange-traded funds (ETFs) allow buyers to invest in Bitcoin without buying the actual asset. This investment method simplifies the buying process and users do not need to sign up for an exchange or use a crypto wallet to participate.
In traditional investing, an ETF is a form of investment that tracks the price of an asset or group of assets. ETFs represent an easy way to invest in multiple assets at the same time without actually holding those assets.
In the case of Bitcoin, a Bitcoin ETF is an asset that only tracks the price of Bitcoin. By investing in Bitcoin ETFs, users can still profit from Bitcoin’s gains without going through the process of buying Bitcoins, such as registering on exchanges and going through various verification methods.
That said, Bitcoin ETFs themselves are very limited. The first so-called Bitcoin ETF is the ProShares Bitcoin Strategy ETF (BITO), launched in October 2021. However, this ETF does not invest directly in the asset, but instead invests in a Bitcoin futures exchange-traded fund as an alternative investment, making the ETF offered by ProShares even more “fake.”