Bitcoin’s leading position in the cryptocurrency market has recently peaked to a level not seen in the last three years, with Bitcoin representing 55% of the $2.4 trillion market value of all digital currencies. As per data from CoinMarketCap, this milestone mirrors a dominance observed in April 2021.
Other major players such as Ether, Tether, BNB, and Solana are following behind. Apart from the occasional whales and sharks buying Bitcoin, the success of Bitcoin’s position in the industry has partly been influenced by the Bitcoin ETF.
Bitcoin ETFs are investment funds that follow the Bitcoin value and are traded on market exchanges of cryptocurrency platforms. They enable investors to engage in Bitcoin without the need to navigate the CEX, offering price advantages, all with a nominal fee to an ETF broker.
The latest group of US exchange-traded funds (ETFs) introduced by companies like BlackRock Inc. And Fidelity Investments have gathered $56 billion in assets, marking one of the most successful launches for an ETF. The increase in investments has boosted Bitcoin to a record high of $73,798 in the middle of March.
According to Benjamin Celermajer, a director at Magnet Capital, an asset investment firm, the shift in institutional investors’ focus towards US ETFs has significantly strengthened Bitcoin compared to other market assets. However, Bitcoin ETFs have also provided retail investors a platform to diversify their portfolio.
Investing in a Bitcoin ETF allows investors to broaden their investment portfolio. It will enable them to benefit from the performance of Bitcoin without needing in-depth knowledge of how Bitcoin operates, managing a wallet, creating accounts on various cryptocurrency platforms, or facing the risks associated with owning Bitcoin.
Considering that Bitcoin operates in a decentralized environment, many tax havens and pension funds worldwide restrict Bitcoin purchases. Conversely, a Bitcoin ETF traded on exchanges would likely be subject to regulation by the SEC, which provides tax advantages for investors.