Bitcoin vs Bitcoin ETF: What's the Difference? (Part One) (2024)

FAQs

Bitcoin vs Bitcoin ETF: What's the Difference? (Part One)? ›

However, just keep in mind that you are not actually "buying Bitcoin" when you buy a Bitcoin ETF. Instead, you are buying exposure to the price of Bitcoin. In much the same way, when you buy an ETF tracking the S&P 500, you are not actually buying shares of every company in the S&P 500.

Bitcoin futures ETFs have been around for a while, although they operate a bit differently than a spot ETF. These ETFs do not hold any bitcoin and only hold futures contracts based on the future price of bitcoin. This makes them potentially even more volatile than bitcoin itself.

The main difference of Bitcoin vs Bitcoin SV is the block size. While Bitcoins block size was originally set at 1 MB by its creator Satoshi Nakamoto (and then raised to 4 MB later on), Bitcoin SV was set to a much higher value in order to enable it to handle more transactions.

Spot bitcoin ETFs should track their net asset value much more closely than early bitcoin trusts, which makes them a safer option for investors. And shares can be created and redeemed every day, which should keep demand and supply in balance.

The primary risk of spot Bitcoin ETFs lies in Bitcoin's inherent volatility, which can lead to significant fluctuations in the ETF value. Investors must be prepared for rapid price changes and potential losses. Additionally, ETF management involves fees, such as expense ratios, which can impact overall returns.

Bitcoin ETFs are exchange-traded funds that track the value of Bitcoin and trade on traditional market exchanges rather than cryptocurrency exchanges. They allow investors to invest in Bitcoin without having to go through the hassle of using a cryptocurrency exchange while providing leverage to its price.

The live Bitcoin SV price today is $49.91 USD with a 24-hour trading volume of $56,339,643 USD.

Technical analysis suggests a potential increase in Bitcoin SV in 2025. The minimum BSV price expected for 2025 is $100.74, while the maximum is $121.75.

Coinbase's decision to delist BSV came in 2021 after the coin's underlying blockchain suffered a “51% attack,” causing the network to become unstable. Since then, Coinbase users have been unable to buy or sell BSV, although they can still hold the cryptocurrency in their wallets on the platform.

Is it worth investing in Bitcoin ETF? ›

If long-term price performance is your only investment goal, then the new Bitcoin ETFs make a lot of sense. However, you could prefer direct-asset ownership of Bitcoin if you are concerned about the regulatory or legal aspects of crypto.

Another form of diversification is investing in assets with low correlation. Assets with low correlation tend to move in different directions, so for instance when stocks are up, Bitcoin or a Bitcoin-linked ETF tend to be down. This further diversifies your portfolio, and can help you weather market bumps over time.

The value of these ETF shares is typically tied to the price movements of bitcoin. This allows investors to invest in bitcoin's performance without dealing with the complexities of managing and securing the cryptocurrency themselves.

IBIT may trade at a premium compared to the net asset value (NAV) of the underlying Bitcoin, potentially leading to higher costs for investors. Additionally, IBIT is subject to traditional market trading hours, limiting the flexibility that comes with 24/7 cryptocurrency trading (Cryptopotato.com).

"Concerns about the roll costs are misguided; BITO has closely tracked bitcoin's price since inception," Simeon Hyman, global investment strategist at ProShares, told CoinDesk in an email interview. "Since its inception (through 7/18), BITO has returned -54.5% compared to -51.5% for bitcoin.