This week marks a significant moment for Bitcoin, as new trading funds on cryptocurrency exchanges are shaking things up in the market.
Rick Edelman, a noted investor and personal finance author, views this development as a way to enhance accessibility for investors.
He’s particularly enthusiastic about a buffer ETF.
Edelman shared that “now you can invest in Bitcoin ETFs that shield you from downside risks while still allowing you to reap benefits during upward trends,” during an interview on CNBC’s ETF Edge.
As the founder of the Digital Asset Council, which provides education on cryptocurrencies to financial advisors, he has a strong voice in this space. He has also been inducted into the Baron Financial Advisors Hall of Fame.
He believes that “cryptocurrency should be treated as a long-term investment, akin to the stock market,” and that it can play a role in diversifying one’s portfolio.
Interestingly, he mentioned, “The Bitcoin rally is underway.” The cryptocurrency surpassed $100,000 on Thursday for the first time in months, with Bitcoin rising about 6% this week and almost 10% this month.
However, Edelman expressed concerns about leveraged and reverse Bitcoin ETFs. He cautions that many crypto ETFs may not be appropriate for retail investors, as the intricacies can be quite complex.
“Like buying a lottery ticket”
“These leveraged ETFs typically reset daily,” he pointed out. “It’s almost like purchasing a lottery ticket. This isn’t genuine investing.”
During the same segment, host Bob Pisani highlighted the Double Bitcoin Strategy ETF (BITX), referencing its daily fees and resets that characterize many leveraged Bitcoin products.
BITX performed well this week, gaining over 12%. Meanwhile, other ETFs have collectively risen by 19%. Still, BITX has not fared as well overall this year, showing only about a 1.5% increase compared to Bitcoin’s 10% rise.
Volatility Shares manages BITX, and the company notes on their site that “these funds are not suitable for all investors… Investors could potentially lose their entire investment value in a single day.”
