Bitcoin Fund vs Bitcoin ETF: Difference and Comparison

“Every informed person needs to know about Bitcoin because it might be one of the world’s most important developments.” This is a quote by the two-time Nobel Peace Prize nominee Leon Louw.

Bitcoin is no doubt the largest form of cryptocurrency. It has now become a very popular item to invest in. Many major companies own this cryptocurrency, and some even have started using them to pay the salary of their employees.

Key Takeaways

  1. A bitcoin fund is an investment fund that allows individuals to invest in bitcoin without having to purchase and store the cryptocurrency. In contrast, a bitcoin ETF is a fund that tracks the price of bitcoin and can be traded on a stock exchange like a regular stock.
  2. Bitcoin funds are managed by professional investors with experience managing cryptocurrency investments, while large financial institutions manage bitcoin ETFs.
  3. Bitcoin funds are only available to accredited investors, while bitcoin ETFs are available to anyone with a brokerage account.

Bitcoin Fund vs Bitcoin ETF

A Bitcoin fund is an investment pathway making people invest in Bitcoin without owning cryptocurrency, collecting investors’ money on their behalf. A Bitcoin ETF or exchange-traded fund that tracks the price of Bitcoin gives investors exposure to Bitcoin’s price movements through traditional stock exchanges without directly managing Bitcoin themselves.

Bitcoin Fund vs Bitcoin ETF
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Bitcoin Fund is a pool of resources by a number of investors who invest in Bitcoin for the result of profit in the future. There are many companies one can invest in to take part in the Bitcoin Fund.

Bitcoin ETF is short for Bitcoin exchange-traded funds. They allow the public to buy and sell, all over, trade this particular cryptocurrency easier and at a lower price.

Comparison Table

Parameters of ComparisonBitcoin FundBitcoin ETF
Another nameBTC fundBitcoin Exchange-Trade Fund
Tax implicationsBitcoin Fund lacks in tax implications if to be compared with ETFs.They have clearer tax implications.
Founder CompanyGrayscale Bitcoin Trust (GBTC).The Purpose Bitcoin ETF (BTCC) and the Evolve Bitcoin ETF (EBIT)
Year of launch20132021
 LiquidityFunds take more time to liquidate.Bitcoin ETF’s are a little easier to liquidate in comparison to Funds.

What is Bitcoin Fund?

Bitcoin Fund is a type of fund where a group of people can pool their resources and investments and start to trade, that is, the selling and purchasing of Bitcoins over the internet.

The client-facing Bitcoin Fund is a new thing, though not being popular right now but is slowly getting better while it receives reputation as more and more people start to get the value of Bitcoin and what advantages the currency can bring to the people.

These Bitcoin Funds can be used by long-term wealth creators by someone who is just getting into the cryptocurrency Bitcoin market and wants to learn the basics of things.

bitcoin fund

What is Bitcoin ETF?

Bitcoin ETF is a bundle of pooled resources by a number of investors. They are used by these investors in order to diversify their portfolios. The first official ETF, “COIN” bitcoin ETF was released in 2013 but was rejected.

Bitcoin ETF, is particular, is an investment that tracks the performance of the purchased item or asset. One does not need to trade in Bitcoins if they buy Bitcoin ETF.

Bitcoin ETFs, like Bitcoin Funds, are different from actively managed funds since both of them are used for investment as a long-term wealth creation by the investors.

bitcoin etf

Main Differences Between Bitcoin Fund and Bitcoin ETF

  1. Closed-end Bitcoin Funds can only hold a particular number of shares for people. In comparison, Bitcoin ETFs can create new shares.
  2. Bitcoin Funds are older, the year being 2013 than Bitcoin ETF, where the first Bitcoin ETF launched in 2021.
Difference Between Bitcoin Fund and Bitcoin ETF
References
  1. https://www.sciencedirect.com/science/article/pii/B9780128021170000278
  2. https://ieeexplore.ieee.org/abstract/document/8740574

Last Updated : 13 July, 2023

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