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Fidelity Close to Sending Bitcoin ETF Spot Deposit
Fidelity is reportedly close to filing its application for a Bitcoin spot exchange-traded fund (ETF). This would make Fidelity one of many issuers seeking to launch a Bitcoin ETF.
Rumors suggest that Fidelity may be preparing to make a “seismic” move in the crypto space, such as buying out Grayscale or filing a spot Bitcoin ETF application. Fidelity already offers crypto trading and opportunities, including ETFs focused on cryptocurrencies.
However, it is not yet clear when Fidelity will submit its application for a Bitcoin ETF. The next SEC decision date for spot Bitcoin ETF approval is in August 2023, and experts suggest that 21Shares, ARK, and CBOE are first in line for approval.
What is a spot Bitcoin ETF?
A spot Bitcoin ETF is an exchange-traded fund that invests in Bitcoin at its current market price, allowing investors to hold Bitcoin within the fund, similar to buying a stock. A spot Bitcoin ETF provides the same streamlined investment capabilities as a Bitcoin futures ETF, but it only allows users to invest at Bitcoin’s spot price rather than a future value. A Bitcoin ETF is a publicly-traded investment vehicle that tracks the value of an underlying asset, in this case, Bitcoin. A Bitcoin ETF would enable investors to gain exposure to Bitcoin without actually having to hold their own cryptocurrency.
What is the difference between a spot Bitcoin ETF and a futures Bitcoin ETF?
A spot Bitcoin ETF invests in Bitcoin at its current market price, allowing investors to hold Bitcoin within the fund, similar to buying a stock. On the other hand, a futures Bitcoin ETF trades based on the price of Bitcoin futures contracts, which means traders don’t own any Bitcoin, but instead, they only need to enter an agreement about the price of Bitcoin on a certain date in the future.
Here are the key differences between a spot Bitcoin ETF and a futures Bitcoin ETF:
Spot Bitcoin ETF:
- Invests in Bitcoin at its current market price
- Allows investors to hold Bitcoin within the fund
- Provides streamlined investment capabilities
- Considered more legitimate by enthusiasts
- Requires investors to actually buy Bitcoin
- Confers ownership to investors
Futures Bitcoin ETF:
- Trades based on the price of Bitcoin futures contracts
- Traders don’t own any Bitcoin
- Only requires entering an agreement about the price of Bitcoin on a certain date in the future
- Does not confer ownership to investors
- Allows investors to bet on the price going down
- Trades based on the price of Bitcoin futures contracts (i.e., the price when the contract expires and becomes due).
Both spot and futures Bitcoin ETFs offer investors some form of access to Bitcoin, and investors can invest in spot Bitcoin ETFs and track their investments based on Bitcoin’s actual market price, making it an attractive option for some investors. However, whether a spot Bitcoin ETF or a futures Bitcoin ETF is better depends on the investor’s preference and investment goals.
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