As the popularity of Bitcoin and other cryptocurrencies continues to grow, so does the demand for products that track the performance of this new asset class. While there are currently no exchange-traded funds that track the price of Bitcoin, there are a number of other products that do.
The first and most well-known is the Bitcoin Investment Trust (OTC: GBTC), which is traded on the over-the-counter markets. This fund was created by Grayscale Investments, a subsidiary of Digital Currency Group, in 2013.
The fund is designed to track the performance of Bitcoin, and it does this by holding actual Bitcoin on behalf of its investors.
The second product is the XBT Provider ETN (COINXBT: SS), which is traded on the Stockholm Stock Exchange. This ETN was also created by XBT Provider, a subsidiary of Digital Currency Group, and it also tracks the performance of Bitcoin.
However, unlike GBTC, which holds actual Bitcoin, COINXBT only holds cash equivalents. This means that it is not subject to the same regulatory hurdles as GBTC, and it can be bought and sold in most countries.
The third product is the CME CF Bitcoin Reference Rate (BRR), which tracks the price of Bitcoin on major exchanges such as Bitstamp, GDAX, itBit, and Kraken. The BRR is calculated by taking an average of the prices on these exchanges every day at 4:00 p.
NOTE: WARNING: Investing in Bitcoin ETFs can be highly speculative and is not suitable for all investors. The value of a Bitcoin ETF can fluctuate significantly over short periods of time and may be subject to extreme volatility. There is no guarantee that the value of a Bitcoin ETF will increase or remain stable. Additionally, the development, regulation, and taxation of Bitcoin ETFs in many jurisdictions is still uncertain and may change. Before investing in any Bitcoin ETF, investors should carefully consider their investment objectives and risk tolerance level.
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The BRR is designed to be a more accurate representation of the actual price of Bitcoin than any individual exchange because it takes into account the volume and weighting of each exchange. The BRR is used by CME Group to price its Bitcoin futures contracts (BTC), which began trading in December 2017.
The fourth product is the Winklevoss Blended Bitcoin Index (WinkDex), which was created by Cameron and Tyler Winklevoss, the founders of Gemini Trust Company LLC. WinkDex tracks the price of Bitcoin on major exchanges and weights them according to their 24-hour trading volume.
WinkDex is used by Gemini to price its Gemini dollar (GUSD), a stablecoin that is pegged to the U.S.
dollar. GUSD can be bought and sold on Gemini’s exchange or used to purchase other cryptocurrencies listed on Gemini.
So far, none of these products have been able to completely replicate the returns of investing in Bitcoin directly. However, they do provide investors with exposure to this new asset class without having to go through a cryptocurrency exchange or deal with all of the associated risks.
As more products are created and more institutional investors enter this space, it’s likely that we will see products that better track the performance of Bitcoin and other cryptocurrencies.
9 Related Question Answers Found
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When it comes to Bitcoin, there are a lot of questions that people have. One of the most common questions is whether or not Bitcoin can be traced. The answer to this question is complicated, but we will try to make it as simple as possible.
When it comes to Bitcoin, there is a lot of talk about anonymity. But can you really trace Bitcoin transactions? It is no secret that Bitcoin is often used for illegal purposes.
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When it comes to tracking bitcoin, the FBI has a few options. They can track bitcoin by looking at the blockchain, tracking IP addresses, or using data from exchanges. The blockchain is a public ledger of all bitcoin transactions.
