ARKB ETF Price Guide: Trading ARK 21Shares Bitcoin ETF

Bitcoin (BTCUSD), the first and most traded cryptocurrency, has garnered significant attention from traders for its potential to transform the financial landscape. Those interested in Bitcoin trading and seeking a regulated and accessible option can turn to the ARK 21Shares Bitcoin (ARKB) ETF or Exchange-Traded Fund.

Let's explore this Bitcoin ETF in more detail and how to trade it with Contracts For Difference (CFDs) on Plus500:

TL;DR

• The ARKB ETF allows traders to gain exposure to Bitcoin through an ETF, leveraging the combined expertise of ARK Invest and 21Shares in the cryptocurrency space.
• On Plus500, you can buy, sell and trade Bitcoins through the ARKB ETF with CFDs.
• Traders can use various trading styles depending on their trader profile and goals.

What Is ARK 21Shares Bitcoin ETF (ARKB)?

The ARK 21Shares Bitcoin (ARKB) is an ETF that was launched on 10 January 2024, and tracks Bitcoin's price movements.

It uses the CME CF Bitcoin Reference Rate- New York Variant as a benchmark to measure Bitcoin's performance in American Dollars (USD) adjusted to account for operating costs and other liabilities.

The CME CF Bitcoin Reference Rate- New York Variant (BRRNY) is a daily benchmark price for Bitcoin, calculated using trade data from various Bitcoin-USD markets on major cryptocurrency exchanges.

ARK Invest and 21Shares developed the fund, which is listed on the Cboe BZX Exchange Inc. It is one of the four Cboe U.S. Equities Exchanges with the BYX Exchange, the EDGA Exchange, and the EDGX Exchange.

Understanding Bitcoin ETFs

ETFs (Exchange-Traded Funds) are funds that trade on stock exchanges, offering a way to invest in a basket of assets. They are like baskets of securities that track the performance of the related asset. With Bitcoin ETFs, these financial products replicate the price of Bitcoin.

Advantages and Risks of Trading Bitcoin ETFs

Bitcoin ETFs offer several advantages for traders. They provide a regulated way to trade Bitcoin without the complexities of direct BTC ownership. Additionally, ETFs are typically managed by professionals with expertise in the cryptocurrency market. Compared to directly buying Bitcoin coins, ETFs often have lower fees, making them more accessible to a wider range of traders compared to direct Bitcoin buying and securing. Furthermore, ETFs typically hold Bitcoin in secure custody, reducing the security risks associated with individual token ownership.

But Bitcoin ETFs also come with certain risks. One of the primary risks is the volatility of Bitcoin prices. Bitcoin's value can fluctuate significantly, leading to potential losses for traders. Additionally, ETFs may not perfectly track the underlying Bitcoin price, which can impact returns. Another limitation is that by trading ETFs, you don't directly own Bitcoin. Finally, the cryptocurrency market is still new and evolving. Regulations may change over time, which could impact the performance of Bitcoin ETFs.

Spot Bitcoin ETFs vs Futures Bitcoin ETFs

When trading Bitcoin ETFs, you can choose between spot-based or futures-based ETFs.

Spot-based ETFs hold actual Bitcoin, offering a direct and regulated way to trade the cryptocurrency. They often provide added security through cold storage, which is where they hold their BTC tokens.

Futures-based ETFs invest in Bitcoin futures contracts. They are financial agreements to buy or sell Bitcoin at a future date for an agreed price determined in advance. This approach allows you to speculate on Bitcoin's future price.

What Can Influence the Value of the ARK 21Shares Bitcoin ETF (ARKB)?

The ARKB ETF's value is closely tied to Bitcoin's price. Since the fund invests nearly 100% of its assets directly in Bitcoin tokens, any fluctuations in Bitcoin's price will directly impact the ETF's value.

The token availability, competition, adoption rate, use cases, halvings, forks and governance, mining cost, crypto regulation, market sentiment, stock market volatility, and global developments are some of the factors that can move Bitcoin's price.

Pros and Cons of Trading ARKB with CFDs

A CFD, or Contract for Difference, is a financial instrument that lets you trade on the price fluctuations of an underlying asset without owning the asset itself. On Plus500's trading platform, you can use CFDs to speculate on the price movements of cryptocurrencies.

This means you can make a profit or a loss based on whether you're right or wrong about a given cryptocurrency's price going up or down, without actually buying or selling the cryptocurrency itself.

In addition to CFDs on cryptocurrencies, Plus500 also offers CFDs on various types of ETFs, including Bitcoin ETFs like the ARK 21Shares Bitcoin (ARKB). In that case, you can trade rising and falling prices of the Bitcoin ETF value without holding any shares of the ETF.

Why Might Traders Choose to Trade ARKB ETF with CFDs?

• Trading Strategy Flexibility: Use long and short positions to trade both rising and falling ARKB ETF prices without owning the underlying ETF to be able to capitalise on all market conditions.
• Better Diversification​​: Add Bitcoin exposure to your portfolio and get access to different asset classes through a CFD single trading platform, including shares, Forex, indices, and commodities, among others.
• Accessibility: Even though leverage can be risky as it can amplify both gains and losses, it allows for greater exposure to the Bitcoin market with a lower initial investment.

What Are the Risks of Trading CFDs on Bitcoin ETFs?

• Leverage Risks: Leverage can magnify both profits and losses, which means that traders can face greater losses when the market moves against them if they don't use strict money and risk management rules.
• No Ownership of the Underlying Asset: CFD traders don't own the underlying shares of the Bitcoin ETF they're trading.
• Market Volatility: Bitcoin ETFs are known to be subject to high market volatility.
• Overnight Fees with Certain Trading Strategies: Holding CFD positions overnight when using strategies like swing trading may incur fees, which can reduce your overall profit or increase your overall loss.

Investing vs Trading Bitcoin ETFs

While both investing and trading Bitcoin ETFs involve buying and selling assets with the goal of making a profit, they differ in their time horizon, risk tolerance, and strategies:

• Investing in Bitcoin ETFs typically focuses on long-term growth, seeking to hold ETF positions for extended periods. Investors often aim to capitalise on the potential long-term appreciation of Bitcoin's value by employing strategies like position trading and fundamental analysis.
• Trading Bitcoin ETFs often involves shorter-term strategies, such as day trading. Traders aim to profit from rapid price fluctuations by buying and selling ETF positions frequently. Technical analysis and other tools on trading charts are often used to identify significant technical triggers.

How to Trade the ARK 21Shares Bitcoin (ARKB) ETF with CFDs on Plus500 (Step-by-Step)

1. Know the major cryptocurrency terms.
2. Learn why you should trade cryptocurrencies with CFDs and how ETF CFD trading works.
3. Write your trading plan.
4. Learn how to control your emotions when trading and how to set up the right trading mindset.
5. Open a Plus500 trading account and make a deposit.
6. Start a demo account.
7. Once ready, switch for a real trading account.
8. Look for the CFD on the ARK ETF on Plus500.
9. Open your positions on ARKB by taking into account your risk management rules (leverage level, number of contracts, stop-loss order, and take-profit order)
10. Monitor your positions.

If you're ready to start trading CFDs on the ARK 21Shares Bitcoin (ARKB) ETF, you can open a CFD account with Plus500 to speculate on the ETF's price movements.