A bitcoin ETF (bitcoin exchange traded fund) that directly tracks the price of bitcoin, rather than through certain types of contracts that use bitcoin as underlying. Such contracts that involve indirect tracking of the price of bitcoin include futures contracts and similar types. An investor can have an exact exposure to the price movement of these digital assets, bypassing the potential risks involved in such indirect vesicles.

This type of ETF (exchange traded fund) allows ordinary and institutional investors to gain exposure to movement of bitcoin’s spot price, while being backed by physical bitcoins that underpin the value of the ETF. If the value of the bitcoins backing the ETF increases, the value of investment in the ETF can generally be expected to increase. A physically-backed bitcoin ETF is the most direct method of investing in bitcoin without buying and holding bitcoin on a crypto exchange. The fund rather holds the coins on behalf of its investors.