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What is an ETF and What are its Advantages?

Over time, crypto markets have gained many features and terms used and preferred in traditional markets, one-on-one or with a more advanced infrastructure and technology. The term ETF is one of the terms that has managed to become a very frequently used term and popularized in the crypto world.

In this content, we will try to explain in detail what ETF is and what are the advantages of ETF.

What is an ETF?

ETF; It is the name given to mutual funds that reflect investment products such as stocks, bonds, bills, and commodities to their investors.

ETF stands for; It is in the form of Exchange Traded Funds in English, abbreviated from the first letters of these words, and its Turkish equivalent is used as Exchange Traded Funds (ETF).

ETFs, that is, exchange-traded funds, which are currently used in traditional stock markets, can be bought and sold as easily as stocks in stock markets, and this is the most important difference that distinguishes ETFs from other mutual funds.

ETFs can be easily bought and sold during stock market session hours through banks or authorized institutions.

What are the Advantages of ETF?

The cost of ETFs or exchange traded funds in Turkish is quite low compared to other mutual funds. This is one of the most preferred reasons for investors.

Another advantage is that ETFs do not have a maturity restriction. ETFs can be traded on a long-term basis, thanks to the absence of maturity restrictions.

ETFs, which are popular with the preference of the world’s most famous investors and have managed to attract the attention of other investors, are subject to the collateral of the stock markets in the countries where they are accepted. That is, they can be both loaned and held in a short or long position.

In many countries, including Turkey, it is possible to find banks or intermediary institutions that provide the opportunity to buy and sell ETFs. All that needs to be done is to create an investment account and buy and sell on this investment account.

ETFs, which are the most preferred investment tool by investors with their features such as being preferred by the largest investors in the world, having low costs and being easily bought and sold, continue to be popular especially in the last period, while another popularization factor is crypto markets.

What is a Bitcoin ETF?

As mentioned at the beginning of the article, many terms, features, etc. in traditional markets. crypto markets are also beginning to take place or crypto markets are gradually succeeding to take place in traditional markets.

The first step of this development started when the Winklevoss Twins applied to the SEC, the United States Securities and Exchange Commission, for Bitcoin.

With this application, the ETF started to become even more popular, and all investors started researching ETFs and wondering what they were good for.

When the Winklevoss Twins’ Bitcoin ETF application was rejected by the SEC, this had a negative effect on the Bitcoin (BTC) price, and the Bitcoin price fell. The popularity of the ETF continued to grow, with Bitcoin rebounding a few days later.

After the application made by the Winklevoss Gemini, CBOE (Chicago Board Options Exchange), named in Turkish, started Bitcoin Futures Transactions and then submitted a new application to the SEC for the Bitcoin ETF.

Since the reasons for the rejection of the Bitcoin ETF application made by Winklevoss before and rejected by the CBOE were not included in the application made by the CBOE, the whole market predicts that this application will be accepted.

Professional stock traders already know what will happen if the Bitcoin ETF application is approved, and they are eagerly awaiting the outcome of this application. However, to give brief information to investors about the advantages and benefits that will be gained if the Bitcoin ETF application is approved, we can list it as follows:

  1. If the Bitcoin ETF application is approved, Bitcoin (BTC) will be strengthened and regulated like investment vehicles listed on traditional exchanges such as the NASDAQ and NYSE.
  2. Bitcoin (BTC) will become an important investment asset around the world once the ETF application is approved.
  3. With the Bitcoin ETF, the number of institutional investors in the crypto markets will increase tremendously.
  4. With the Bitcoin ETF, the risk of loss on investments will be reduced to only 0.5%.
  5. All investors who are afraid of entering the crypto markets and are afraid of serious losses will be able to enter the crypto markets with peace of mind.
  6. With these developments, the price of Bitcoin will rise very seriously and will continue to rise.
  7. This rise will be in question not only for Bitcoin, but also for all other crypto assets.
  8. ETFs will become investment tools not only for traditional markets but also for crypto markets.
  9. Investors will be able to earn by adding many assets to their ETFs such as Bitcoin, Ethereum, gold, currencies, stocks.

In summary, ETF, that is, exchange traded funds, is an investment tool for traditional markets for now, but if the Bitcoin ETF is approved, a serious movement will be provided in the crypto markets and a bridge will be established between the traditional markets and the crypto markets.

It is unknown whether we will see crypto assets in traditional markets or traditional investment tools in crypto markets in the future, but it is certain that if the result of the Bitcoin ETF application is positive, crypto markets will become as legal, reliable and less risky as traditional markets.

Aslıhan Yüksel

Aslihan Yuksel, who works as a manager inleading brands and companies in the business world; As a result of his interest in the crypto world and its markets, he has been interested in cryptocurrencies, markets and developments for a long time and transfers all his knowledge within Binansal.