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What is an ETF?

An Exchange-Traded Fund (ETF) is a type of investment that can be bought or sold on the stock market. ETFs group different assets together, like stocks or bonds, into one product. By buying an ETF, you own a small part of the group. For example, the SPDR S&P 500 ETF (SPY) tracks the performance of 500 large U.S. companies, and the Invesco QQQ ETF (QQQ) tracks the top 100 companies on the Nasdaq. ETFs are a great way for investors to get exposure to a variety of assets easily.

What is a Bitcoin ETF?

A Bitcoin ETF is an ETF that tracks the price of Bitcoin. When you buy shares of a Bitcoin ETF, you're indirectly investing in Bitcoin’s price movements without actually owning Bitcoin yourself. It’s a way to invest in Bitcoin using a traditional investment product, which you can buy or sell like regular stocks on the market.

Hong Kong Bitcoin ETFs

Hong Kong Bitcoin ETF's are regulated by local authorities and are available on the Hong Kong Stock Exchange (HKEX). They allow you to invest directly in Bitcoin, but the options may be more limited.

U.S. Bitcoin ETFs

U.S. Bitcoin ETFs are also based on the spot price of Bitcoin, allowing you to invest directly in Bitcoin through a regulated exchange, similar to the way you would invest in traditional stocks or bonds.

Risks:

• Volatility: Both ETFs will still follow Bitcoin’s price.
• Custody: With a Bitcoin ETF, you don’t own the actual Bitcoin. This means you can’t withdraw it or move it freely like you can when buying Bitcoin on an exchange.

This leads to the common saying “not your keys, not your Bitcoin.”

• Liquidity: It can sometimes be harder to buy or sell shares of Bitcoin ETFs, especially in markets with low trading volume.
• Ownership: With a Bitcoin ETF, you’re buying shares, not actual Bitcoin. This means you can’t transfer or spend the Bitcoin, as it’s held in the ETF fund.
• Fees: Bitcoin ETFs tend to have management fees, which are usually higher than fees at most crypto exchanges.
• Security: ETFs might feel safer, as it offers a regulated way to invest in Bitcoin, but you won’t have control over the Bitcoin itself. Besides, how do you know the government won't change their stance and just confiscate your Bitcoin in the end after all? Trust in an ETF is placing your trust in another third party.
• Access: Bitcoin ETFs are relatively easy to buy through brokerage accounts. Not as easy as setting up a Bitcoin Exchange Account. But it is still relatively easy.

Our Recommendation:

Buy Bitcoin on an Exchange and Store It in Your Own Wallet If you want to have full control of your Bitcoin, we recommend buying it on a trusted exchange and transferring it to your own wallet. This way, you own the Bitcoin directly and don’t have to rely on a third-party ETF. Storing it in your own wallet is the safest and cheapest way to own Bitcoin, as it gives you full control over your assets.