Is there a place for crypto assets in your investment portfolio?
Until October 19, this year, the only way to own some cryptocurrency would be to buy it at one of the crypto exchanges.
Many retail investors were reluctant to this idea. The purchase of digital currency assumes storage difficulties and security threats. The idea seemed to resemble the purchase of a gold bar to store on a shelf with grandma’s porcelain. The list of largest crypto hacks in history indicates that the value of stolen cryptos equals billions of U.S. dollars, so the fears are reasonable.
In December 2018, Bitcoin futures trading was launched on Chicago Merchantile Exchange. Being a SEC-regulated derivative, it boosted speculative trading of Bitcoin. Yet, retail investors still had trouble investing in this asset. One lot of Bitcoin futures at CME equals 5 BTC, so the margin requirements for trading it stayed far beyond the scope of retail investors’ capabilities. Even micro-lot BTC trading didn’t find much attention among ordinary people who didn’t plan to open special accounts to trade at a futures exchange.
The U.S. Securities and Exchange Commission kept rejecting numerous attempts to offer the public a Bitcoin ETF until it finally greenlighted BITO.
The new Bitcoin ETF currently trades at NYSE. It gives investors the opportunity to take advantage of digital currencies’ investing potential in a regulated environment and use the same financial infrastructure they use to invest in traditional assets.
Risk Warning: The information in this article is presented for general information and shall be treated as a marketing communication only. This analysis is not a recommendation to sell or buy any instrument. Investing in financial instruments involves a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both an increase and a decrease in capital. Please refer to our Risk Disclosure available on our web site for further information.
I can remember the first time I bought bitcoin in 2016. Not many people trusted and believed in owning bitcoin at that point. Since then bitcoin has become accepted by most of the world and I think it has a place on investment platforms. The ISEC blog does well to bring this conversation.