European: First Spot Bitcoin ETF Launched – Is this a good opportunity for investors to access Bitcoin?

Recently, information about the first European ETF investment fund on Euronext Amsterdam has been released.

So, Europe is one step ahead of the US in the issuance and application of an ETF for Bitcoin investment, although this initiative started in the United States.

Whether this is a new investment opportunity for investors or is it hiding many other risks, let's find out with FinFan in the following article.

What is a Bitcoin ETF?

What is an ETF?

An ETF is a fund that was opened initially as a mutual fund with the form of raising capital of investors and investing in assets such as stocks, bonds, real estate, etc.

However, in contrast to a normal mutual fund, an ETF is an investment fund that is listed on a stock exchange like a common stock and is supervised and protected by a competent financial authority in the country or region of issue.

What is a Bitcoin ETF?

Just like the ETF of stocks on the stock exchange, the Bitcoin ETF was born by the original investment funds for the purpose of investing in Bitcoin. After that, this fund is listed on the exchange and protected by the respective authorities (in the US, it is the SEC).

The first ETF on a stock market in the EU

Jacobi Asset Management has launched the Jacobi FT Wilshire Bitcoin ETF, an eco-friendly digital asset fund. It aligns with the EU's sustainable finance guidelines, which emphasize a focus on making positive contributions to the environment and society.

Jacobi originally hoped for his Bitcoin ETF to launch in July 2022, meaning it's been more than a year since its original planned launch.

The ETF, which trades under the ticker BCOIN, is overseen by the Guernsey Financial Services Commission (GFSC). Fidelity Digital Assets handles the custody duties of the ETF, Flow Traders act as market makers, and both Jane Street and DRW act as authorized participants.

Is that a good opportunity for investors to access Bitcoin?

Advantages of the new way of Bitcoin investment

With this new way to invest in Bitcoin, investors can more easily access Bitcoin without worrying about the problem of Bitcoin's huge spread that could make them lose money without getting any government protection.

Like other forms of ETFs, when Bitcoin ETF is recognized by competent state agencies, is responsible for partially compensating investors for the worst-case scenario of that ETF.

The spot Bitcoin ETF directly holds BTC, allowing investors to mine the price without directly buying or handling the cryptocurrency.

The approval of the Bitcoin ETF fund is also a condition to pave the way for companies that can aim to open more ETFs on other major digital currencies such as Ethereum, Polygon, Solana, etc.

Disadvantages of this Bitcoin investment

Although U.S. regulators have approved Bitcoin futures ETFs, they have so far rejected many spot Bitcoin ETF proposals, expressing concerns about the potential for market manipulation and fraud due to a lack of funds transaction monitoring.

Furthermore, the agreement and approval to launch an ETF on Bitcoin is extraordinary given the currency's high price volatility. This means that, over time, investors may abandon other ETFs with low-interest rates in favor of this fund, causing an imbalance in market finance transactions to occur and negatively impacting the operations of other businesses. Because the investment of investors in ETFs also contributes to helping businesses have more capital to operate.

Individual investors are very susceptible to FOMO and participate in investment activities with high-interest rates and are easily caught in the price manipulation trap in the market.