Drawbacks of Bitcoin Futures ETF


We all know commodity ETF where everyone can invest easily and get returns.

Similarly, Bitcoin ETF has been launched on October 19, 2021. A place where the general public and now even an institution can invest in this very easily compared to what it was used to be.

Bitcoin ETF means Bitcoin Exchange Traded Funds where it can be just like a normal commodity trade like Oil, Silver, Gold, etc. We know the benefits of it like ease to trade, liquidity, attracting institutional investors, less time consuming, etc. But do we have disadvantages?

Well, there are many to be said but we will only look at them which are foremost in importance while or before trading in Bitcoin Futures ETF.

Looking at the first disadvantage you cannot look beyond the competition. This is as big as any currency in the world right now. After looking at the fact that institutional investors will also be coming to this trade, you can simply be looking at the competition behind this one ETF. There is a reason behind the increased competition is a disadvantage.

It can be simply seen through this that many people will be coming in for investing if the platform will be this simple and easy. Also with the institutional investors coming to invest big will lead to taking the price to a different level or extent which is risky and harmful.

As the number of people investing will increase the speculations will start floating in the market. And as soon as the speculations will go up the price will be shaking hand with it. This might lead to a sudden fall in price and major losses for people and lead to an overall market dip.

This is a futures ETF and there can be many derivatives for the price. The future speculation will always be there, but this can also lead to manipulations of the prices. If this happens there won’t be any control over the currency. How will this happen? Here’s the answer.

Let’s say you bought a 100Cboe bitcoin contract expiring in March. The final value of these contracts is set by daily auctions at 4 pm ET on Gemini, a bitcoin spot exchange. The idea behind Gemini’s auction is to bring together many buyers and sellers to determine a benchmark bitcoin price for that day.

There are many which you can find on various platforms. But definitely, if you are planning to invest or have invested already you should be careful of the facts that are there to threaten your investment or investments.

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