Not all bitcoin ETFs are the same. Here are some questions to consider before buying any

abcnews.go.com:

The first question an investor needs to ask before buying one of the new bitcoin ETFs is if they actually want to own bitcoin

NEW YORK — Now that bitcoin funds are trading, which is the best to own?

The answer is not necessarily the one that rises the most. The job of these funds is to track the price of bitcoin, whatever that is, in what can be a more convenient thing to own for many investors.

So if bitcoin is falling, for example, a bitcoin fund that’s rising in price may not be doing what an investor is looking for.

The first question an investor needs to ask before buying one of the bitcoin funds is if they actually want to own bitcoin. The cryptocurrency has been around a decade and a half, but much of professional Wall Street still sees it as too risky and speculative to own.

It has a history of drastic swings in price, which can come suddenly and happen over the weekend or overnight in its 24/7 trading. Its daily average volatility is roughly three and a half times that of the global stock market, according to John Laforge, head of real asset strategy at Wells Fargo Investment Institute.

“Highlighted a different way, bitcoin's price return in 2022 was -64%," he said, «while its 2023 return was 157%.”

But bitcoin also holds the allure of possibly moving in ways that other investments aren’t. Investors are always looking for what’s called an “uncorrelated asset” whose price might zig when everything else they own is zagging. Such independent movements can make an overall portfolio less volatile.

Another question investors must answer is how they want to buy bitcoin. The main way until now has been to buy it directly and then to either hold it in what's called a wallet or leave it on an exchange.

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