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Spot ETFs Overview
Spot ETFs Overview
BhatMmohsinSpot ETFs are exchange-traded funds that track the current price of an asset, like bitcoin or ether. Here are some key points about spot ETFs:
Definition: Spot ETFs track the current price of an asset and hold the underlying asset in a secure digital wallet managed by a custodian.
Price Tracking: The value of shares in a spot ETF is tied to the amount of the asset it holds and its current market value.
Working of Spot ETFs
Investment: Investors can buy shares of spot ETFs through traditional brokerage firms or investing apps.
Custodianship: Assets are stored in secure digital wallets, often in cold storage, to minimize risks like hacking.
Price Fluctuation: Share values in spot ETFs fluctuate based on changes in the underlying asset's price.
Advantages and Risks
Advantages: Spot ETFs offer accessibility, a familiar trading process, and regulatory oversight.
Risks: Price volatility and custodianship risks are key factors to consider when investing in spot ETFs.
Recent Developments
SEC Approval: The SEC approved 11 spot bitcoin ETFs in January 2024 and is expected to approve spot ether ETFs by July 4, 2024.
Key Players
Approved ETFs: Key players in the spot bitcoin ETF space include ARK, Bitwise, Fidelity, Grayscale, and others.
Custodians: Many spot bitcoin ETFs have selected Coinbase as their custodian.
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