A basic guide to the wonders of ETF

The hottest topic investors talk about near the end of 2023 is exchange-traded funds or ETFs. Among the top assets where this is offered are Bitcoin (BTC) and Ethereum (ETH). This makes it already an exciting new prospect for 2024. 

What makes an ETF such an appealing asset is its potential not only as a source of profit but also how it can bolster the crypto industry as a whole. If you are looking for reasons to invest in Bitcoin or Ethereum ETF, then here is Gamdom’s guide to catch you up to speed:

Roll to win Bitcoin at Gamdom Dice

Core basics to understanding ETF

An ETF can be described as a pool of funds for investment that the exchange can use on the investors’ behalf. This means that the people who provided the funds can sit back and just let the exchange make the decisions. Profits are all paid as per agreement with the exchange so investing in ETFs is both safe and reliable. All of the important aspects of it are as follows:

Main purpose

The main purpose of an ETF is to allow investors to join a venture that they don’t want to be directly involved in. This is common among various commodities that people don’t fully understand like Bitcoin and Ethereum. These are rapidly developing ventures that are not regulated by the Securities and Exchange Commission (SEC) of the United States (US). 

The SEC can’t provide a proper framework to regulate virtual currencies but they can for ETFs. That means investors in the US can invest in BTC and ETH-related projects but only by proxy. This is why Blackrock’s Bitcoin ETF offers on ProShares are making headlines across the world.
 

Expense ratios 

One of the key ETF benefits you should also know about is that they have a lower expense ratio than buying stocks and commodities directly. These are ‘costs’ that you pay for the exchange like a fee. It’s their cut of the investment and it usually comes in percentages. 

Dividends 

Investing in exchange-traded funds gives you profit from the commodity’s/stock’s rise and fall. On top of that, the exchange also pays you in dividends for holding onto your assets. It’s like a loan interest because you gave them the funds to buy Bitcoin/Ethereum so you own these assets. They’re technically borrowing them so you’re paid occasionally for your ownership.

Types of ETFs

All ETFs are all passive income in nature so this ETF investment guide is focused on giving you the gist of its general concept. If you want to delve deeper into the details, then you must know about its varieties. There are many ETF types available in exchanges right now and they will keep expanding as time goes on. For now, here are the two major categories of ETFs:

• Traditional ETFs
  Traditional ETFs are investments in physical commodities, properties, and assets. The ETF will be tracking the following markets to determine how its pooled funds will be used:
  • Equity: ETF tracks the value of shares of a company.
  • Fixed-income: Bonds are listed and traded on stock exchanges.
  • Commodity: Refers to raw materials like metals and fossil fuels.
  • Currency: Tracks relative fiat currency value, including inflation.
  • Specialty funds: ETFs for a specific market rather than a broad industry.
  • Real estate: Tracks property values like houses & lots, warehouses, and rentals. 
     

Spin to win real cash prizes at Gamdom Roulette

• Crypto ETFs
  Crypto ETFs are for newer kinds of investments. These refer to all digital assets built on distributed ledger technology (DLT) called the blockchain. All pooled funds will be used in specific cryptocurrencies like Bitcoin ETFs being for BTC only. There are thousands of them but they can be divided into the following categories:
  • Crypto: Refers to Bitcoin as the main cryptocurrency in the digital assets market.
  • Altcoin: Non-Bitcoin assets like Ethereum and Litecoin (LTC).
  • Stablecoin: Currencies like Tether (USDT) which is equal to the United States dollar (USD). 
     

How to invest in ETF

Securing an ETF investment is easy so it’s a market that is open for almost everybody. Here is everything you need to know to get started:
 

Use brokerage services

The first factor an investor needs to keep in mind is that they need to find an exchange that offers ETFs. Plus, it must be securities for assets that they specifically want to participate in like Bitcoin ETFs for the crypto market or gold ETFs for commodities. 

Choose an ETF

As stated, there are plenty of ETFs you can choose from. You have to determine which industry you want to support and/or profit from. The crypto market is one of the hottest deals nowadays, especially since the SEC allowed it in 2024. The only ETF cons in crypto is that its market is new. If you prefer a more tried venture, then opt for traditional ETFs. 

Track ETF market performance 

You can track all market trends on exchanges but reading charts is an advanced skill you have to learn to be a better trader. Understand how indicators work and what every element of a candle chart means in tracking market trends. This is the best way to determine if the ETF you are investing in is still a worthwhile venture or if it’s time to cash out.

Final verdict: Is it safe to invest in ETF?

Yes, it is relatively safe to invest in ETF. The only question now is, which one would be the most lucrative? There are many answers to this question but right now, the most exciting prospects are Bitcoin and Ethereum ETFs launching in 2024. All of the top exchanges like ProShares, Valkyrie, and VanEck already list them. 

This can mean that BTC or ETH can see exponential growth in market trends, leading to reaching a new all-time high in 2024. That’s a good sign for Gamdom players because it means your crypto winnings can be sold at a high rate soon. Better yet, there can be more industries that accept them as payment. 

Play fun Bitcoin games at Gamdom