It’s no secret that the investment world has drastically changed throughout the years, and one of the most popular investment vehicles has been bitcoin. Many investors, especially those who are new to the cryptocurrency market, often find themselves confused and unsure of what the different product offerings are when it comes to investing in bitcoin. The two most popular options available are bitcoin spot and bitcoin futures ETFs.
Bitcoin spot is a type of investment that directly involves the purchaser in the actual ownership of the digital currency. When an investor buys bitcoin in this manner, they are buying it from a seller at a certain exchange rate. The exchange rate used is typically the current rate at the time the purchase is made. The investor then receives the digital currency in their own wallet and the ownership entirely belongs to them.
Bitcoin futures ETFs, on the other hand, do not involve the investor in direct ownership of the digital currency. Instead, an ETF is a type of collective investment where the investor is pooling their money with other investors to speculate on the price of bitcoin in the future. This kind of investment does not involve the investor in any of the actual ownership of the digital currency.
The key difference between bitcoin spot and futures ETFs lies in the way they are purchased. Since an investor in the bitcoin spot market buys the digital currency outright in their own wallet, they can then choose to either hold or sell their bitcoin for whatever price they feel like at any given point. On the other hand, an investor in the bitcoin futures ETF market does not actually own the digital currency, and so they cannot choose to hold or sell their investment whenever they feel like. Instead, their investment is tied to the collective ETF and any gains or losses they experience from the investment are determined by the movements of the overall ETF.
In summary, the primary difference between bitcoin spot and futures ETFs is the way the investor purchases and owns the digital currency. With bitcoin spot, the investor owns the digital currency and can decide to hold or sell it for whatever price they feel is right. With a futures ETF, the investor does not own the digital currency directly and instead relies on the collective ETF to determine their overall gains or losses. Depending on an investor’s individual goals and risk tolerance, either option may be suitable for them.