The key word in investing is diversification, and this is especially applicable for cryptocurrency: by putting your eggs in more than one basket, you’re less likely to suffer a major financial blow.
One of the biggest developments in crypto is the ETF being publicly traded on Wall Street. Lets’ see in what way this represents a new opportunity for a diversified portfolio, especially when it comes to Bitcoin ETF.
What is a bitcoin ETF?
An ETF (or exchange-traded fund) is a regulated financial instrument which tracks an index and seeks to copy the returns of the index, which means that a bitcoin ETF tracks the value of the bitcoin.
Bitcoin ETFs can be bought, sold and traded on traditional stock market exchanges when the market is open. What makes investing in a bitcoin ETF one of the easiest and most hassle-free investments when it comes to cryptocurrency? The fact that in such a case, you don’t possess the Bitcoin. Instead, you own units of the fund, which saves you from getting familiar with things like blockchain, hard wallets, exchanges or mining.
Bitcoin ETF Portfolio diversification
A bitcoin ETF holds more than one asset: it could hold bitcoin-related stocks and other assets or even actual bitcoin. Simply put, instead of buying individual stocks, investing in a bitcoin ETF opens the door to a multitude of options.
ETFs follow established benchmark indexes like the S&P 500 to give investors a large exposure to the companies in those indexes, and unlike a managed fund, a bitcoin ETF aims to match the performance of the index, which means more predictable returns.
If you are a professional investor looking to enrich your portfolio with digital assets, exchange-traded funds are an easy, flexible and transparent way to invest- the next best opportunity to diversify your portfolio.