Bitcoin regulation is controversial even after its worldwide expansion. While many countries took a cautious approach, others welcomed the cryptocurrency with open arms, such as the case of El Salvador. However, both movements don’t seem efficient, as some customers highly demand crypto regulations, while others aren’t even provided with a bank system in their own country.
The Bitcoin trend increased as price fluctuations can be taken advantage of to improve one’s asset value, but it’s still risky to invest in case of a lack of training. Still, what makes Bitcoin an incredible asset is its resistance over the years and people’s inclination to use it against inflation.
Bit by bit, different countries are taking action regarding cryptocurrencies in accordance with customer demand and the nation’s availability of using an additional currency.
Hong Kong officially approved that trading Bitcoin ETFs is accepted
Although Hong Kong’s position on using cryptocurrencies was initially reluctant, the country’s leading financial institution, HSBC, has finally decided that trading BTC ETFs is permitted. The agreement was formed after prior discussions on official banks following a similar trend. For example, Samsung launched a Bitcoin ETF program, among other institutions.
The decision may help attract capital to benefit Hong Kong, but the approval of ETF trading is a big step towards improved investor sentiment. That’s because China used to declare all crypto-related transactions illegal just a year ago, and now it’s moving towards digital economic development.
Are ETFs such a big thing?
An ETF (exchange-traded fund) can be considered an investment fund of securities listed for trading on exchange websites. A crypto ETF tracks the shifts of a digital asset’s value, but it’s traded like any standard ETF. Bitcoin ETFs are in high demand because they allow anyone to invest in an asset without owning or managing crypto. Blockchain ETFs are also better to invest in because fewer risks are involved.
ETFs have considerable advantages, such as providing more price action and eliminating security concerns to open opportunities for cryptocurrencies like Bitcoin and Ethereum. Crypto ETFs also allow for more portfolio diversification, making them more convenient to use.
However, ETFs are challenging to handle, considering they’re costly to manage. And considering they’re not tradable with other currencies, ETFs pose a liquidity risk. Finally, one of the biggest disadvantages is that ETFs are centralized, meaning they don’t benefit from high-end privacy and asset security. Plus, centralization is prone to censorship, which is a considerable obstacle for crypto investments.
Considering risks, should people invest in ETFs?
The demand for ETFs increases as investors take their assets to another level. Since investing in crypto ETFs is similar to stocks, it is easy for long-time investors to expand their portfolios. Therefore, anyone can give it a try, but only if they’re experienced enough ―ETFs are not made for beginners.
Some simple steps for investing in ETFs include the following:
- Setting up an online account on a trading platform;
- Funding the account with the wanted sum of money;
- Deciding how many ETF shares are fit for the portfolio;
With ETFs, buying fractional shares is possible, making it the perfect trading opportunity for long-term investors. However, considering the increasing number of risks, many countries, such as the US, still don’t approve of the use of Bitcoin ETFs. Trading platforms are also not developed in order to face an increasing number of customers, which may pose much more risks than benefits to traders.
Bitcoin vs. Ethereum ETFs: which is a better investment?
Bitcoin and Ethereum have plenty of similarities, but they’re also different in terms of products and services provided. However, there are many reasons why investors would choose Bitcoin. First, Bitcoin is the first cryptocurrency ever released, and it resisted numerous price fluctuations through the years. At the same time, it’s one of the most reliable digital coins as it has expanded in different economies, and experts are considering it a good alternative to fiat money.
On the other side, Bitcoin is extremely volatile, and its price fluctuation is sometimes so intense that it leads to massive losses. This impacts users who invest in the short term the most, but that doesn’t mean other investors are protected.
Others would choose Ethereum instead of Bitcoin because its blockchain provides an ecosystem for numerous decentralized apps, autonomous organizations, and NFTs. This interest increase in multiple industries leads to more cryptocurrencies circulating as the network of investors expands.
Of course, investing in Bitcoin and Ethereum is possible, but users must be incredibly cautious about their moves and timing; that’s because crypto prices are heavily influenced by supply and demand or media coverage, which can change overnight.
Trading vs. investing: which is safer?
Although trading and investing in cryptocurrencies can be approached interchangeably, they have different features that need to be acknowledged. For example, although trading can generate quick profits, it’s risky due to increased volatility. Therefore, they could lose all their input if traders don’t monitor their positions and take a wrong turn.
However, investing in cryptocurrencies has a significant potential for capital appreciation in the long term. Therefore, long-term investors can still make considerable profits despite price fluctuations and challenges. Investing is also a great tool against inflation because crypto prices are more resistant to market sentiment changes.
In other words, crypto trading is made for short-term activities, while investing is made for long-term users. Users should consider this simple rule when it comes to investing their time and money because this is what makes the difference between a successful portfolio and losing all valuable assets. Of course, the risk level is directly proportional to the long or short-term profit.
As Hong Kong eases regulation on cryptocurrency, users can freely trade Bitcoin ETFs. This allows for the circulation of more coins and increases the economy’s interest in the country’s potential. This will enable Bitcoin to be slowly adopted within worldwide economies and used regularly as a store of value. Still, traders must be prepared for high volatility and increased demand.