What Do You Need To Know About Bitcoin Tracker One: The Bitcoin ETF Alternative?

What Is A Bitcoin ETF?

In this age of digital innovations, a few of the Bitcoin linked securities similar to Bitcoin futures contracts these have been approved by the regulators while actively trading in the US as well as global markets with remaining confined in the market participants in such derivatives based securities to active traders and institutional participants with deep pockets. While advocating the launch of the Bitcoin exchange-traded fund, for a long time has been the cryptocurrency proponents. 

It is also expected to facilitate a low cost and convenient route once approved for retail investors gaining Bitcoin exposure through exchange-traded products. The Securities and Exchange Commission (SEC) for Bitcoin ETFs has several applications that have been unsuccessful as they leave no domestic option for Bitcoin ETF for US-based investors. Here there are foreign listed instruments recently paving the way for allowing US investors to take a secure route to trade and investing in Bitcoin. 

While it is a fact that an exchange-traded note that has been available for trading on the Nasdaq Stockholm exchange is the Bitcoin Tracker One that has recently started quoting in US dollars. This tracker instrument was earlier available only in Euros and Swedish krona, as also US dollar edition thereby allowing US participants to trade. 

How Bitcoin Tracker One Works?

The Bitcoin Tracker One has become the first to be listed Bitcoin-based security on a regulated exchange classified as a non-equity linked tracker certificate that has security attempting to track the performance of underlying asset trading as any other standard share listed on the exchange.  

Providing exposure to the performance of Bitcoin is Bitcoin Tracker One by tracking the performance of the price of Bitcoin before a fee. This product comes with the main objective to provide a daily return that is approximately equivalent to the performance of Bitcoin across three most liquid digital exchanges that are selected by the product provider before fees and costs. as explained in simple terms, if the price of Bitcoin moves up or down 1%, the price of Bitcoin Tracker One ETN expects to move by the same amount.

Securing approval from the Swedish FSA, the ETN maintains the necessary Bitcoin reserves in custody with certificates guaranteed by Global Advisors Limited where it does not distribute any dividends. 

How to Trade Bitcoin Tracker One?

Using the ticker symbol CXBTF, any investor can purchase ETN shares through brokerage accounts as investors purchase shares of Bitcoin Tracker One paying money to get an equivalent stake in Bitcoin less any fees. ETN essentially allows investors to make low-cost, low-amount investments in Bitcoin. As the investors want to cash out Bitcoin ETN holdings, it is simply by selling their shares getting the dollar equivalent as the issuer sells equivalent number or fractions of Bitcoin for the redemption.

Advantages Of A Bitcoin ETN

Investors of Bitcoin Tracker One doesn’t need to worry about the safe storage of Bitcoin as it is taken care of by custodians as well as guarantors certifying the actual Bitcoin reserves. On the other hand, in the case of individuals directly hold Bitcoin in digital wallets it is their responsibility for the security of digital assets remaining vulnerable to the rising number of thefts and hacks.

Making the Bitcoin investment more affordable for smaller retail clients is the comparatively low amount per share. Taking away the hassles of maintaining and securing a separate digital wallet thereby additionally, the holding resides as a standard share in the Demat account.

Risks Associated With a Bitcoin ETN

Coming with forex risk is the investment that one can buy Bitcoin Tracker One ETN shares in US dollars while getting the orders executed in dollars still settled and cleared in local currency held in custody in Sweden. It may impact the net returns, as a result of any fluctuations in the dollar-krona rate.

It is important to note that investors should keep in mind that this is a net asset value-based product getting priced as an end-of-the-day product comparable and pitched as an apt substitute for a Bitcoin-based ETF where the Bitcoin Tracker One ETN technically is not an ETF. Generally traded in real time, ETFs have prices changing every second allowing intraday trading opportunities for active traders as well as short selling options. These active trading features,, unfortunately,, cannot be exploited using Bitcoin Tracker One. 

Similar to credit risk linked to the financial position of issuer and counterparty risk, the product comes with other standard risks representing chances of default by the issuer. Ensuring the safety of investments through the reserve provision it remains limited to custodian and guarantor being able to repay what is owed. 

Offering ease of convenience to the general public, such investment products have the valuation of products directly tied to an underlying asset: Bitcoin. The price of Bitcoin Tracker One shares is sure to tank as the price of Bitcoin goes down significantly. Comparable to Grayscale Bitcoin Investment Trust is the ETN. 

The Bottom Line

The ETN route offers an alternative while US Bitcoin enthusiasts still need to wait longer for a true Bitcoin ETF albeit one with additional risks, costs, and overhead.