SEC approval to boost bitcoin as investment option

Vijay Valecha, Special to the Khaleej Times Jan 15, 2024

Bitcoin turned 15 on January 9 this year. The next day, on January 10, the Securities and Exchange Commission approved Bitcoin ETFs for its markets. It is a great gift to investors who have been keen to trade in the cryptocurrency but were dithered by a variety of reasons, including volatility and lack of regulatory checks.

A spot Bitcoin ETF will invest directly in Bitcoin and closely track its price. The appeal of such products is their direct exposure to the asset without the hassle of cryptocurrency exchanges and blockchain wallets. Investors can buy shares of a spot Bitcoin ETF through brokerage accounts.

On the bright side, the fierce competition for new bitcoin fund assets means that trading the cryptocurrency just got a lot cheaper. As of now, 21 Bitcoin ETFs in spot and future trading are up and running with Grayscale’s Spot Bitcoin Trust having the highest market cap of $26.71 billion. While Grayscale charges a fee of 1.50 per cent, other fund managers including BlackRock, Fidelity, Franklin Templeton, and others charge 0.25 per cent, as per data on Blockworks.co.

What do financial advisers say?

It’s a unanimous yes for investing in these instruments by a lot of financial advisors. “It is recommended that investors consider allocating a percentage of their portfolio to a US Bitcoin ETF, with the exact percentage contingent on individual risk tolerance and investment goals,” advises Vijay Valecha, Chief Investment Officer, Century Financial.

Retail investors looking to trade in Bitcoin ETF should remember that cryptocurrency is a young, volatile, and risky asset class. Bitcoin has been volatile. While it has given huge returns to early investors, it has also eroded capital for many others. Financial advisers suggest investing no more than five to 10 per cent of your portfolio to the newly introduced ETF.

Source:

Khaleej Times