Crypto ETFs are exchange-traded funds. Basically, the ETFs track the value of the underlying crypto assets but they trade on traditional market exchanges. This offers crypto enthusiasts an opportunity to trade in crypto without having to actually learn using a cryptocurrency exchange. However, gone are the times when as a crypto exchange owner you would build your own Bitcoin Exchange website that would be difficult to use for a new crypto trader. Nowadays, crypto exchanges are designed to offer an intuitive experience from the start.
Coming back to crypto ETFs, they also mean a lot more to the crypto world. That’s because they bridge the gap between traditional markets and the crypto markets. Interestingly, a fair bit of demand for crypto ETFs from the institutions has been noticed recently.
Passively managed
Unlike crypto assets, crypto ETFs are managed by fund managers who have years of experience in managing portfolios. As it is a known fact that the crypto market is highly volatile, it could be really challenging for a new trader to keep a track of the price of assets and this could lead to potential losses.
Crypto ETFs are generally backed by multiple crypto assets. As a result, the fund manager can help investors buy and hold multiple assets via a single trade. This also lowers the cost incurred by the investor as he is not required to conduct multiple trades. It also simplifies the tracking of portfolio value for the investor.
Instant diversification
A crypto EFT can be designed to hold a number of crypto assets under one single umbrella. This helps in the instant diversification of investors’ funds.
More secure
Cryptocurrency exchanges and wallets are sometimes prone to security glitches. To keep his/her funds secure, an investor needs to take more precautions like storing his assets in a cold wallet and protecting his private keys. In the case of a crypto ETF, the protection of your assets is the liability of the broker. Thus, it frees the investor from the burden of managing the security of his crypto assets. Moreover, if you are planning to build your own Bitcoin exchange website make sure all the security aspects of a crypto exchange are met.
Better returns
A new crypto trader or institutional investor might find it difficult to keep a close watch on the price movements of crypto assets. As a result, their investments are exposed to higher risks. With crypto ETFs, the investors shift their risk and gain better returns on their investments.
Lack of ownership
Crypto assets are actually a hedge against fiat as it is independent of being controlled by central banks. However, by buying a crypto ETF, an investor has to give up the benefits of decentralization offered by the underlying crypto asset. Also, with a crypto ETF, the investor basically just owns an agreement, not the actual asset.
Management fees
Crypto ETFs are managed by fund managers who generally charge a significant amount of fee to manage the ETFs.
Inaccuracy
A crypto ETF might have multiple crypto assets holding under it. As a result, even when a particular asset gains value, the overall ETF might not show proportional gains.
That is why most crypto traders still prefer investing in crypto assets using a crypto exchange. If you are wondering how to build your own cryptocurrency exchange that is simple, intuitive, and fast enough to meet the demands of the market, Antier Solution’s expertise is just a call away.
