Bitcoin investing could get boost from exchange-traded fund

 Interested in Bitcoin but don't want to open a crypto trading account? Wall Street has something for you.

Interested in Bitcoin but don't want to open a crypto trading account? Wall Street has something for you.

ProShares said Monday it plans to launch the country's first exchange-traded fund linked to Bitcoin. The ETF with the ticker symbol BITO is expected to begin trading Tuesday, barring any opposition from regulators.

It's the latest milestone for Bitcoin and for the ETF industry in general. In a statement, ProShares CEO Michael Sapir compared the launch of a crypto-linked ETF to the 1993 launch of the first stocks ETF and the 2002 rollout of the initial bond ETF. The U.S. market for ETFs has grown to more than USD5.4 trillion and they're owned by roughly 9per cent of all the nation's households, according to the Investment Company Institute.

Cryptocurrencies, meanwhile, have exploded into a nearly USD2.5 trillion industry after the creation of thousands of digital currencies. Bitcoin is the biggest of them all, with a total value of nearly USD1.2 trillion. But like much in the crypto world, the Bitcoin-linked ETF is a bit complicated.

The fund won't invest directly in Bitcoin itself. Instead, it will focus on futures related to Bitcoin, a market that's overseen by U.S. regulators and can be complicated in its own right. That means investors need to be particularly aware of what they're buying, and how it's likely to perform.

Here's a look at what the ETF does and doesn't do:

WHY IS THIS A BIG DEAL?

A Bitcoin-related ETF would give investors a new way to get involved in the fast-growing field of cryptocurrency. Bitcoin's price has more than doubled this year, and a growing number of investors see it as a way to offer their portfolios some protection.
The hope is that Bitcoin's price will move in a way that's not as tied to expectations for the economy as stocks and other investments are. If it does, it could help support portfolios when everything else is falling or when inflation is high. It doesn't have a perfect track record, though: When the U.S. stock market fell nearly 34per cent at the start of the pandemic in 2020, Bitcoin lost roughly as much.

Some investors may not want to open a new trading account for cryptocurrencies. Instead, they can buy the ETF through old-school brokerage accounts they may already be using for their stocks or their IRA.