Investment Funds and Bitcoin

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( — March 31, 2021) — An investment fund is a pool of capital from various investors used by an intermediary to purchase collective securities. Each investor retains the ownership and control of their share in the pool. In other words, a fund manager pools capital from various investors interested in investing in common security or a multi-asset fund. The fund manager will buy, hold and sell investments on behalf of the investors. The types of investment funds include Exchange Traded Funds (ETFs), mutual funds, hedge funds, and money market funds. 

Asset Classes For Investment Funds

When it comes to investment funds, there are two classes of portfolios investors can subscribe to. They are the single asset portfolio and the multi-asset portfolio. 

  • Single-Asset Portfolio

In a single-asset portfolio, the fund manager invests the pool of funds at its disposal in a specific type of financial security. Examples of securities a single asset portfolio invest in include shares, real estate, and bonds.

  • Multi-Asset Portfolio

A multi-asset portfolio allows the fund manager to invest the pool of funds at its disposal to several financial securities at the same time. This means that funds can be invested in securities like shares, bonds, commodities, and real estate, all in the same portfolio.

Advantages Of Investment Funds

  • It provides a broader selection of investment opportunities;
  • There is better management expertise;
  • Lower investment fees; and 
  • Lower risk.

Bitcoin As An Investment

Bitcoin is the number one digital currency traded and invested by people all around the world. When it comes to trading, there are different methods and different platforms that can aid you in bitcoin trading, and you can easily make your money without any hassle. Bitcoin is a viable investment option since its inception. It has provided profitable returns year in year out for those that have taken the risk to invest in it. Also, the fixed supply of bitcoins makes it a perfect way to store wealth with the belief that its value will keep on appreciating. The types of bitcoin investment available include ETFs comprised of Bitcoin-related companies and bitcoin trusts. You can invest in bitcoin in two major ways: using altcoin exchanges or through an investment platform that trades and offers bitcoin investment. 

Impact Of Investment Funds On Bitcoin

There are different types of investment funds that have impacted the bitcoin market in their own peculiar ways. For ETFs, a bitcoin ETF will help you track the value of bitcoin and trade it on conventional market exchanges instead of cryptocurrency exchanges. This would mean that you are investing in bitcoin through an ETF platform provided by a broker pegged to bitcoin instead of buying the bitcoin on an exchange. In the United States, bitcoin ETFs are yet to be approved because of the unregulated nature of the crypto space, which makes it easy for investors with large holdings to manipulate the bitcoin market. The approval of bitcoin ETFs will allow mainstream investors to include bitcoin and cryptocurrency-based investments in their portfolios. This will have a positive impact on cryptocurrency reception and prices. It will also increase the liquidity and scarcity of bitcoins, which will result in a potential asset appreciation. The impact of gold ETFs on the gold market can be used as a yardstick for the potential impact bitcoin ETFs will have on the bitcoin market once approved. The gold ETF market is approximately $75 billion at current gold prices. This represents 5.6% of the B and C market share. A bitcoin ETF, when approved, could attract as much as $6.7 billion into the market, which is under 6% of the current bitcoin market cap.

A Bitcoin mutual fund is a way for bitcoin enthusiasts who have little or no knowledge about bitcoin trading to make profit without bothering themselves with the risk of trading. With the way mutual funds work, all that will be required is for an investor to choose a reliable funds management company that offer bitcoin mutual funds as one of its investment portfolios. The company will pool the funds of different investors to invest in bitcoin. The profit or loss are shared among the investors depending on the proportion of bitcoin asset each investor has in the portfolio. Just like the bitcoin ETFs, there are no bitcoin mutual funds at the moment in the U.S as SEC is yet to give the go-ahead. However, its impact on the bitcoin market will be positive because it will allow people to get exposed to bitcoin fever without actually buying the digital currency.


The impact of investment funds such as money market funds, hedge funds, and ETFs on the bitcoin market will most likely be positive. The reason is not far-fetched. It will give more people the opportunity to profit from the bitcoin market without learning extensively about bitcoin trading or buying the bitcoin for themselves. The fund manager does all that, and there is also the added advantage of sharing any loss with other investors.