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The Valkyrie Bitcoin Strategy ETF, the second Bitcoin futures based fund approved for the US market, start trading Friday, Oct. 22, on the Nasdaq under the symbol BTF.
Shares closed the day at $24.30, down 4.7% from the start, on a day when Bitcoin prices dipped.
The Valkyrie Bitcoin Strategy ETF will own bitcoin futures contracts rather than the actual coin itself. This means it tries to track bitcoin price fluctuations rather than purchasing the actual asset.
Valkyrie Funds CEO Leah Wald told Bloomberg the regulation of futures in the U.S. might provide some greater sense of security to investors over buying the actual asset. The company has applied for approval of an ETF backed by Bitcoin itself, she said, but does not expect that until possibly next year.
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
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Launched on Oct. 22, 2021 by alternative asset management firm Valkyrie and headed by Leah Wald, the Valkyrie Bitcoin Strategy ETF (BTF) is designed to be a simple way for investors to get exposure to Bitcoin (BTC) cryptocurrency in the major US markets.
ETF trading is available at low or no cost through most US brokerages, while many don’t offer direct access to crypto or to international funds.
The fund doesn’t own bitcoin directly. Instead, fund managers trade futures contracts, which are derivatives traded in the futures market that basically bet on the future price of Bitcoin. The ETF’s goal is to replicate the return of Bitcoin, meaning that a 10% move in the price of Bitcoin would mean a 10% move in the price of the ETF.
There’s no guarantee of that, and the fund is too new to judge how close the correlation will be.
The fund charges an annual management fee of 0.95%, relatively high for an ETF. The widely held SPDR S&P 500 ETF (SPY), for example, tracks the S&P 500 and charges 0.09%.
To check out other Bitcoin-related ETFs, check out our bitcoin ETF guide.
Founder & CEO at Monochrome Asset Management
For everyday investors, accumulating physical Bitcoin comes with added hurdles of custody and operational risks.
"Bitcoin as a technology is battle-tested, but there is an inherent operator's risk when self-acquiring, holding and managing a bitcoin position even for the most experienced digital native, hence there's a market for those who prefer a safe pair of hands to manage their investment in exchange for a small management fee.
"Investing in a Bitcoin ETF offers investors the benefits of a safe yet low barrier to diversifying their portfolio into the asset class since it's a well understood financial product for most investors."
Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
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