First Bitcoin ETF and what you should know

The BITCOIN STRATEGY ETF was just launched on the 18^th of October 2021.

Before anyone jumps in the bandwagon to buy this ETF. There is something you need to know.

The ETF offers a convenient way to gain exposure to Bitcoins. It is available from any traditional stock brokerage platform.

However, the BITCOIN STRATEGY ETF does NOT invests in Bitcoin. It invests in futures contracts.

So, what is futures contract? A futures contract is a legally binding contract in which a buyer agrees to buy a commodity at an agreed price in the future agreed date from a seller. Both the buyer and seller are obligated to transact.

An ETF that uses futures contracts may not be tracking the price of the underlying assets.

Here is an example comparing between GLD (an ETF that invests in actual gold) compared to DGL (an ETF that invests in gold futures). You can see that DGL significantly underperforms GLD.

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