What are Crypto ETFs and How Do They Work?

There are also some downsides. Crypto ETFs charge a management fee, which reduces profits over time. Investors also do not own the cryptocurrency. This means they cannot transfer it, spend it, or use it in any other way.

Another concern is that the ETF trades only during stock market hours, whereas the cryptocurrency markets are available for trading all day and all year round. If something significant occurs overnight, the price of the ETF won’t reflect it until the stock market opens. There can also be tiny discrepancies between the ETF price and the true cryptocurrency price, referred to as tracking error.

And of course, the largest risk is from the cryptocurrencies themselves. Bitcoin and Ethereum may zoom upwards, but also crash unexpectedly. On top of all this, shifting regulations across various nations continue to cast a shadow of uncertainty.

Also Read: Bitcoin Price at $115,500 as ETF Inflows Pause