Differences Between Blockchain ETFs and Bitcoin ETFs

Differences Between Blockchain ETFs and Bitcoin ETFs know it. Even if the cryptocurrency bitcoin has acquired popularity among members of the investment community. Bitcoin exchange-traded funds (ETFs) are still in their infancy. Blockchain exchange-traded funds (ETFs) have also made their debut in the mainstream markets. There have been instances where the terms bitcoin and blockchain have been used interchangeably in news. And mainstream media reporting. Consequently, it is feasible to mistake blockchain ETFs with bitcoin ETFs. Despite the fact that they are two very different financial vehicles.

Blockchain ETF

Blockchain exchange-traded funds (ETFs) are designed to monitor the stock market prices of corporations. That have made investments in blockchain technology through their fund. Due to the fact that blockchain is a technology. It is not associated with any particular company or product.

“Bitcoin requires blockchain, but blockchain does not require bitcoin,” said Christian Magoon. CEO of Amplify ETFs, the world’s largest exchange-traded fund (ETF) dedicated to blockchain technology. The block-chain investing universe is vast, and it is not limited to a single industry or area of the economy. For example, IBM has developed a cooperation with the shipping line Maersk. In order to apply blockchain technology in the freight transportation industry.

Similar to Overstock, an online retailer, Medici Ventures and the tZERO digital coin exchange. Have made blockchain investments through their respective venture funds. Naturally, these firms are among the most popular among investors in blockchain ETFs. The Amplify Transformational Data Sharing ETF (BLOK) and Siren Shares Nasdaq NexGen Economy (BLCN). Of Amplify ETFs, for example. Have incorporated shares of both firms in their respective ETFs.

Bitcoin ETF

In the majority of bitcoin ETF applications that have been submitted. To the Securities and Exchange Commission (SEC). It has been suggested to track the price of bitcoin through futures contracts. That are trade on the Chicago Board Options Exchange and through the CME Group. Among other venues. In this concept, exchange-traded funds (ETFs) monitor the price of bitcoin by owning futures contracts.

The ProShares Bitcoin Strategy ETF, the world’s first bitcoin futures exchange-traded fund (ETF). It launched in October 2021. In this case, it is tracking bitcoin futures contracts that tied. To the future price of the cryptocurrency in question.

This comes after the Securities and Exchange Commission (SEC) rejected numerous bitcoin ETF plans. Claiming “liquidity and valuation” issues with the ETF proposals, and has now rejected these proposals. Grayscale Investments LLC filed an application to convert the world’s largest Bitcoin fund. The Grayscale Bitcoin Trust, into a Bitcoin Spot ETF on the same day that the ProShares Bitcoin Strategy ETF became live. Grayscale Investments LLC is the company behind the ProShares Bitcoin Strategy ETF.

When compared to the volatility of (hypothetical) bitcoin ETFs. These ETFs are substantially less volatile in their current form, according to the SEC. This is due to the fact that they not exposed. To the extreme volatility of bitcoin’s price movements.

Having said that, blockchain technology still considered to be in its infancy. And does not now represent a significant market. Therefore, the stock prices of the companies that included in the index are more subject. To fluctuations in factors that are unrelated to or unaffected by this technology. When bitcoin ETFs are introduce, the policies of regulatory authorities. 

Key Differences

To understand bitcoin ETFs and blockchain ETFs, one must first understand the instruments they follow. A blockchain is the underlying technology of a cryptocurrency. This distinction is critical when discussing investment vehicles.

Even though bitcoin futures are now available on the country’s major exchanges. Several authorities have yet to regulate cryptocurrency. These days, virtual currencies heavily regulated and monitored. Especially for their role in supporting illicit activities like money laundering.

However, block-chain technology has endorse by J.P. Morgan CEO Jamie Dimon. And widely utilized by the financial services industry. Blockchain technology is neither outlaw nor regulate.

Currently, seven blockchain ETFs trade on regulated exchanges. These ETFs all debuted between 2018 and 2021. All of these ETFs list on the Nasdaq, including the Global X Blockchain ETF. These ETFs all debuted between 2018 and 2021. Their expense ratios range from 0.50 percent to 0.95 percent in November 2021.

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