Data shows Bitcoin investment vehicles including ETFs have grown a record 140k BTC over the course of the year 2021.
Bitcoin Investment Vehicles See Sharp Growth In 2021
As per the latest weekly report from Arcane Research, various investment vehicles now hold 140k BTC more than the last year. ETFs now account for 10% of the total fund holdings in the market.
An “exchange traded fund” (or ETF in short) is a type of investment product that tracks the price of another asset or commodity. A Bitcoin ETF, for example, is one that follows the value of the coin.
This means that using an ETF, investors can bet on the price of BTC without having to actually hold the cryptocurrency.
These exchange traded funds weren’t available in the BTC market until this year, but due to the maturing market, financial regulators decided to approve them in certain countries, including the US.
If you are wondering why some investors would prefer to invest in an ETF rather than directly buying Bitcoin, there maybe a couple of reasons for it.
The first advantage is that investors who are unfamiliar with the crypto world no longer need to navigate around cryptocurrency exchanges and the like. ETFs are familiar territory for many, so it becomes natural for some to go for them.
Another benefit is that these futures-based ETFs allow holders to speculate on the price moving in either direction. This means that investors can choose to go not only long, but also short on the price of BTC.
Now, here is a chart that shows the growth of the exchange traded fund holdings as compared to the other investment vehicles during the year 2021:
The emergence of ETFs in the BTC market | Source: The Arcane Research Weekly Update - Week 51
As you can see in the above graph, the amount of the crypto held by funds has gone up by more than 140k BTC over the past year.
Following a consistent upwards trajectory, ETF’s now make up for 10% of the total fund holdings in the BTC market.
The report predicts that by the end of next year (2022), Bitcoin investment holdings will store more than 1 million coins.
At the time of writing, Bitcoin’s price floats around $47.1k, down 2% in the past week. The below chart shows the trend in the price of the coin over the last five days.
After recovering above $51k only a few days ago, BTC's price has again shown sharp downtrend since | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Arcane Research