The US Securities and Exchange Commission’s decision to approve exchange-traded funds that invest directly in Bitcoin brought a new wave of investors to the oldest and biggest cryptocurrency. ETFs have become an enormously popular way for Americans to invest their money in equities, bonds, commodities, currencies and real estate. Spot Bitcoin ETFs from the likes of Fidelity Investments and BlackRock Inc., available since January in the US, are expected to attract many investors who had previously kept crypto at arm’s length.
ETFs, a $7 trillion industry, invest in or replicate the performance of a basket of assets or index. Buying shares in an ETF is easy, as they trade publicly on an exchange all day. The newly approved spot Bitcoin ETFs actually hold Bitcoin, in contrast with previously available products that invest in Bitcoin futures — contracts to buy or sell an asset at a specified price at a later date. The SEC had rejected spot Bitcoin ETFs for the last decade before finally approving them in January.
