3 reasons why foreign users are more inclined to buy Bitcoin ETF
Written by James, Footprint Analyst
In October, the first bitcoin futures ETF in the United States, the ProShares Bitcoin Strategy Futures ETF (ProShares Bitcoin Strategy ETF, trading code: BITO.US), was launched. In just two days of listing, the asset management scale reached 2 billion US dollars.
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Footprint Analytics: Price and Trading Volume of BTC
What are Bitcoin ETFs?
The principle of Bitcoin ETF (exchange-traded funds, exchange-traded funds) is similar to that of investment funds. You can buy into a fund and get shares, which are then traded on an exchange.
Once the spot ETF is approved, the bitcoin ETF needs to help investors hold bitcoin futures or bitcoin. Investors don't need to spend time paying attention to the ups and downs of Bitcoin, and don't have to worry about the need to do some account maintenance work like buying cryptocurrencies. All they need to do is buy into the fund and wait for the investment to grow.
Bitcoin ETFs are great for those who want to invest in Bitcoin but don't want to trade it on a cryptocurrency exchange. Bitcoin ETFs are also a safer option for people who want to invest in Bitcoin but don't want to deal with the risk of storing the cryptocurrency.
Some of the major Bitcoin ETFs (in descending order of assets under management) are:
Grayscale Bitcoin Trust (GBTC)
ProShares Bitcoin Strategy ETF (ProShares Bitcoin Strategy ETF, BITO)
Purpose Bitcoin ETF (Purpose Bitcoin ETF, BTCC)
Valkyrie Bitcoin Strategy ETF (BTF)
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Reason 1: Saving Taxes
In most jurisdictions, taxpayers must pay capital gains tax when they mine or sell cryptocurrencies.
Since BTC is a potentially highly profitable investment, investors need to pay a large portion of taxes to the government after making profits.
For Americans who hold assets for more than 1 year (long-term capital gains), capital gains taxes of 15% to 20% must be paid. In Canada, the amount is similar, although the calculation is completely different.
In the United States and Canada, the maximum contribution limit for each tax-free savings account (such as Roth IRA and TSFA) is $6,000.
If you invest $6,000 in BTC and get 5x it in a year (like you bought before the latest bull run), you could be paying $3,000 to $4,000 in taxes just considering capital gains taxes.
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Reason 2: Leverage trading (applicable in most countries)
Binance is the only platform that offers full leveraged trading and options for cryptocurrencies. But the number of countries that cannot currently use Binance is increasing, Canada, the United Kingdom, and most recently Singapore.
Currently, there are many alternative market indicators for BTC
MVRV Z-Score
stock to flow ratio
Short to Long Term Realized Value Ratio (SLRV)
Realized Profit to Value Ratio (RPV)
Net Unrealized Profit/Loss (NUPL)
The advent of these alternative market indicators, and the highly correlated nature of BTC ETFs to BTC prices, gives BTC traders an edge over those using traditional financial analysis techniques. Because they are easy to predict Bitcoin price fluctuations, huge gains can be realized by purchasing cryptocurrency ETF funds.
If the price of BTC rises to the long-awaited 100,000 mark before the end of March 2022, and more than 90% of the correlation between ETF and BTC remains, if you buy BTC, you can only get 2 times the return, but passOptions on BITO, GBTC or BTCCsecondary title
Reason 3: Simple
Most people don't like managing or handling their own investment accounts, let alone setting up a CEX account to learn and understand cryptocurrencies. Bitcoin ETFs are much simpler, and people invest in Bitcoin from their existing savings accounts.
The 2021 Gallup Poll (Gallup pollin conclusion
in conclusion
Investors new to cryptocurrencies are more likely to choose Bitcoin ETFs for the reasons above. However, there are also some downsides to owning a Bitcoin ETF. We'll discuss that in the next article.
