What to know before buying the first bitcoin ETFs. FOMO ‘is a poor investment strategy,’ expert says

The U.S. Securities and Exchange Commission (SEC) has approved the first spot bitcoin exchange-traded funds (ETFs) in the United States, opening up new avenues for everyday investors to access the cryptocurrency market.

However, experts caution that bitcoin is highly volatile and investors should carefully consider their risk tolerance and investment goals before allocating funds to bitcoin ETFs.

Spot bitcoin ETFs directly invest in the underlying digital currency, unlike previous bitcoin futures ETFs that tracked bitcoin futures contracts.

This approval marks a significant milestone in the cryptocurrency industry, providing broader access to bitcoin for U.S. investors.

The decision prompted an initial surge in bitcoin’s value, briefly reaching its highest level since December 2021.

However, experts advise caution before rushing to purchase bitcoin ETFs.

Bitcoin’s historical variability of returns has been significantly higher compared to the stock market, making it a riskier investment.

To manage potential downside risks, allocating a small percentage of one’s portfolio to bitcoin ETFs may be a more prudent approach.

The introduction of spot bitcoin ETFs offers a more transparent and regulated option for investors seeking exposure to bitcoin, compared to directly owning bitcoin or investing in bitcoin futures ETFs.

However, it’s crucial to understand the inherent risks associated with bitcoin and carefully evaluate whether this investment aligns with one’s financial goals and risk tolerance.