When you want to invest in Bitcoin, you can opt for a cryptocurrency mutual fund. There are several options available in this market. A few of them are the Invesco CoinShares Global Blockchain ETF Fund of Funds, the ProShare Bitcoin Strategy ETF, and Bitcoin futures contracts and hedge funds. However, before choosing one, make sure you understand the risks and benefits of these investment options. This article will help you choose a cryptocurrency mutual fund and make the right investment decision.
Invesco CoinShares Global Blockchain ETF Fund of Fund
Invesco CoinShares Global Blockchain ETP Fund ofF (COIN) is a cryptocurrency exchange-traded fund that invests in stocks of firms related to blockchain technology. The fund aims to closely mimic the returns of the Elwood Blockchain Global Equity Index, which includes companies that are developing and using the blockchain technology. It was due to begin subscription on November 24. However, the ETF has been delayed.
Invesco India Invesco CoinShares Global Blockchain ETP Fund of Fond (G) aims to replicate the Reference Index by holding constituent securities in proportion to the weightings in the Index. The fund may invest up to 20% of its Net Asset Value in shares issued by the same body. Therefore, it is important to note that the fund’s nav may be heavily concentrated in one issuer.
ProShare Bitcoin Strategy ETF
While it is possible to invest in cryptocurrencies without risking your money, a new cryptocurrency mutual fund, the ProShare Bitcoin Strategy ETF, might not be right for every investor. Because bitcoin is a relatively new asset class, it is subject to rapid price volatility and uncertainty. As such, the value of a bitcoin ETF can go down considerably, and sometimes even to zero. However, this is far from the most likely scenario.
ProShare Bitcoin Strategy ETF is a futures exchange-traded fund that invests in front-month Bitcoin futures. This means that it doesn’t actually invest in bitcoin itself, but instead takes positions in Bitcoin futures, which exposes your investment to rollover risk. While BITO doesn’t invest directly in the cryptocurrency itself, investors can buy and sell shares of the fund on the exchange anytime they want.
Bitcoin futures contracts
Before investing in a Bitcoin futures contract for your cryptocurrency mutual fund, you should consider the risk involved. Although these investments have heightened risks, they are often more regulated than trading directly in Bitcoin. If you want to diversify your portfolio and avoid excessive volatility, you may want to avoid investing in Bitcoin futures. Also, keep in mind that there is always the risk of fraud and manipulation. While this investment is generally considered safe, it can be risky and may not meet your objectives.
A Bitcoin futures contract, or BTC, is a contract that is sold for a fixed amount. One contract is worth $39,850 and expires in late August. If the price of Bitcoin rises above that amount, the fund would turn a profit. Otherwise, the fund would lose money. After this, the funds rollover the proceeds from the previous contract into new ones. In this way, the fund has the potential to earn a profit or lose money depending on the current price of Bitcoin.
Bitcoin hedge funds
While cryptocurrency is still relatively young, hedge funds for the digital currency have already attracted the attention of family offices and high-net-worth individuals. A few brave institutional investors have also joined the fray. Despite the lack of a clear institutional strategy, cryptocurrency has a high correlation with traditional asset classes. In fact, the correlation between the S&P 500 index and the top 50 hedge funds reached 0.8 in 2020.
The Bitcoin Strategy ProFund is one cryptocurrency mutual fund, and it has a low minimum investment requirement of $1,000. While Bitcoin is the most popular cryptocurrency, you can also invest in other cryptocurrencies, such as Ethereum, Solana, Cardano, and Litecoin. You can also hold a crypto fund in your retirement account, which is much simpler than buying the cryptocurrency itself. A self-directed IRA is another option, but it requires more work on your part.