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Author: Admin | 2025-04-28
This area will evolve. Given the likelihood that more crypto ETFs will emerge, it's important to be aware of their potential issues. The Risk of Tracking Error Crypto ETFs do not always duplicate the price moves of the underlying digital token. This is especially true for ETFs that depend on futures contracts to track cryptocurrencies, which have to roll over their positions as contracts expire. Higher ETF Fees While crypto ETFs help investors avoid some costs of directly owning digital currencies, they have their own fees. Since they are often actively managed, crypto ETFs can have higher expense ratios than other ETFs. For example, the ProShares Bitcoin Strategy ETF's expense ratio is 0.95%. For comparison, the expense ratio for the SPDR S&P 500 ETF is just 0.09%. Volatility Although cryptocurrency ETFs simplify some of what's involved in trading digital currencies, they are still subject to the dramatic price swings of the crypto markets. This means more risk for you, which can be even more worrying if you are more accustomed to the lower volatility of more typical ETFs. Lack of Direct Ownership Investors in crypto ETFs are not the owners of the digital assets. While crypto ETFs do bring convenience, you won't have control or access to the cryptocurrency itself, and the decentralization and anonymity associated with crypto don't apply to ETF shareholders. ProsTrade on stock exchanges using regular brokerage accountsProvide exposure to crypto without direct ownershipAvoid crypto custody and trading expensesReduce the learning curveConsRegulatory uncertaintyElevated fees and expensesSubject to volatility in crypto marketsNo direct ownership or control over underlying cryptocurrency. Alternatives to Cryptocurrency ETFs In addition to allocating funds to futures and spot ETFs, investors can put their money into several other ETF-like products for crypto exposure. Let's dig into these options. Crypto Trusts While the SEC has only reluctantly approved a handful of crypto ETFs, a similar product has already been available for years: bitcoin investment trusts. These are closed-end funds that resemble the spot crypto ETFs being proposed. They own bitcoins on behalf of investors, and their shares trade in over-the-counter (OTC) markets. But these are not
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