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Spot bitcoin ETFs purchase a select amount of bitcoins that are held in a secure digital wallet by a custodian. These custodians offer bitcoin storage in a secure vault. Most of these vaults are—as crypto insiders call—air gapped in “cold storage,” which means the bitcoins’ keys are stored offline and cannot be accessed through the internet.
The ETFs then issue shares that represent the bitcoins held by the fund. These shares are priced to reflect the current spot price of bitcoin and can be traded on traditional stock exchanges.
Spot bitcoin ETFs make it easier for retail investors and traders to buy and sell an asset tied to the current value of bitcoin without needing to hold bitcoin itself. They also allow investors seeking exposure to bitcoin in retirement accounts to have a much simpler option than opening a self-directed IRA that could hold bitcoin directly. How Does a Spot ETF Maintain Its Price?
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