ProFunds has launched a new mutual fund that will allow traders to invest in bitcoin without purchasing the asset. The Bitcoin Strategy is the first mutual fund in the United States to invest in bitcoin futures contracts.
The goal of the fund is to monitor the performance of the world's greatest digital asset prior to fees and charges.
So many firms have registered to start exchange-traded funds (ETFs) that invest in Bitcoin or Bitcoin futures, but no decisions have been made by US regulators. For the second time in 2021, the Securities and Exchange Commission postponed a decision on whether or not to approve a Bitcoin ETF in June.
1) Bitcoin and bitcoin futures are new asset classes, and the bitcoin market is volatile. Bitcoin and bitcoin futures face unique and significant risks, such as price volatility and a lack of liquidity.
2) An investment in the Fund could lose a considerable amount of money quickly and without warning, even to zero. You should expect to lose all of your money.
3) Bitcoin futures contracts are among the investments made by the Fund. The Fund does not hold or invest in bitcoin directly. Bitcoin futures prices should be expected to differ from bitcoin's current or "spot" price. As a result, the Fund's performance could be expected to diverge from the performance of the bitcoin spot price.
4) Bitcoin futures markets are likely to be less developed, less liquid, and more volatile than more established futures markets. Margin limitations, collateral requirements, and daily limits apply to bitcoin futures, which may hinder the Fund from meeting its goal.
5) Because bitcoin is essentially unregulated, it is more vulnerable to fraud and manipulation than other, more regulated investments. Bitcoin's price fluctuates dramatically, in part due to the actions and remarks of influencers and the media.
6) For any reason, including lack of liquidity, volatility or disruption to the bitcoin futures market, or margin requirements or position limits applicable to the Fund, the Fund may be unable to achieve its investment objective and may incur losses.
7) ProFunds employ sophisticated techniques that may not be appropriate for all investors. Derivatized products, such as ProFunds, carry certain risks.
8) The new mutual fund allows investors to participate in the Bitcoin price without having to handle a hardware wallet or an exchange custodial solution separately.
Mutual funds provide individual investors with access to professionally managed portfolios, but they can only be bought or sold once per day, unlike stocks and ETFs, and they cannot be exchanged throughout the day.
Some individuals and organizations choose to purchase products that are regulated. The complexities of the bitcoin market are often considerably more familiar to everyday investors than mutual funds.
"Compared to directly buying Bitcoin, which may involve opening a new account with an unregulated party, this ProFund offers investors the opportunity to gain exposure to Bitcoin through a form and investment method that tens of millions of investors are familiar with," ProFunds Chief Executive Officer Michael Sapir said in a release.