The First Bitcoin ETF Comes Into Effect, Hikes Prices
As Bitcoin's first exchange-traded fund announced its launching Tuesday, the digital currency's value took a nice hike to $64,499.
As Bitcoin's first exchange-traded fund (ETF) announced its launching yesterday, Tuesday, the digital currency's value took a nice hike to $64,499 per coin, which is just below its all-time high, $64,895.22 in April, 2021.
On its first day of trading, Tuesday, the ProShares Bitcoin Strategy ETF closed up 2.59% at $41.94 - making up to $1 billion in shares on the Intercontinental Exchange Inc's ICE.N Arca exchange.
Interests and demands in digital assets increased over time: Digital currency ETFs have been launched this year in Canada and Europe. While ProShares manages Bitcoin, other companies like VanEck and Valkyrie are also renowned fund managers.
A year ago, Bitcoin was valued at $12,000, passing $60,000 in April.
How does an ETF work?
An ETF is a mutual fund, or an investment fund, where one can invest their money alongside other investors. Units bought in a fund are traded on the stock exchange market. The benefit of this is that it lowers the risk of great losses and encourages the collective advantage of gain.
John Hawkins, a senior lecturer at Canberra School of Politics, Economics and Society at the University of Canberra, explains it well: Suppose you want to invest $100,000 in commercial property, but the asset you have your eyes on is $10 million. Buying the asset alone sounds risky. The fund aggregates 1,000 units, where every unit is sold at $100,000 each - thus, you buy a unit with the money you have. As described, it very much resembles buying a share in a company. The investors profit from the rising value of the asset - and may also lose if asset value decreases.