Valkyrie Bitcoin Fund ETF Guide: How to Trade BRRR

As Bitcoin (BTCUSD) is one of the most traded cryptocurrencies and the largest by market cap, many traders look for ways to trade the cryptocurrency. One way to get exposed to Bitcoin is through the Valkyrie Bitcoin (BRRR), an Exchange-Traded Fund (ETF).

Let's take a close look at this Bitcoin ETF and how you can trade it:

TL;DR

• Valkyrie Funds, acquired by CoinShares in 2024, include the CoinShares Valkyrie Bitcoin (BRRR), which is an ETF that follows Bitcoin.
• Bitcoin ETFs can be traded on exchanges or through Contracts For Difference (CFDs) through CFD providers like Plus500.
• All the factors influencing Bitcoin's price, such as halvings, adoption rate, and regulation, can impact the Valkyrie Bitcoin ETF.

Understanding Valkyrie Bitcoin ETF (BRRR)

A major milestone for cryptocurrencies occurred on 10 January 2024. The US Securities and Exchange Commission (SEC) greenlit 11 proposals for spot Bitcoin ETFs from companies like Fidelity (FIS), Blackrock (BLK), VanEck, and Valkyrie.

What Is the Valkyrie Bitcoin Fund (BRRR)?

The Valkyrie Bitcoin ETF's goal is to follow the price of Bitcoin. The ETF holds Bitcoin and calculates the value of its shares daily using an index that reflects the trading activity of major crypto exchanges, which was launched in February 2022.

The Characteristics of the Valkyrie Bitcoin Fund

• Exchange: Nasdaq
• Fund Type: Alternative
• Inception Date: 10/01/2024
• Sponsor: CoinShares
• Sponsor Fee: 0.25%
• Underlying Asset: The Bitcoin index as depicted by the CME CF Benchmarks Bitcoin Reference Rate-New York Variant
• The ETF owns Bitcoin tokens that are secured in cold storage.

How Do Bitcoin ETFs Work?

An Exchange-Traded Fund or ETF is a type of fund that tracks the value of different instruments, like stocks, commodities, or even specific trading strategies based on leverage and short-selling, for instance.

You can buy and sell ETFs at any time during the trading day, and their prices change based on trading activity reflected in the various bullish and bearish movements.

Bitcoin ETFs are financial products similar to funds or trackers that aim at replicating the price of Bitcoin. They work like traditional stocks, allowing you to buy and sell shares of these ETFs when the markets are open.

These ETFs invest in Bitcoin futures contracts, which are agreements to buy or sell Bitcoin at a future date or "Bitcoin spot" depending on Bitcoin's immediate price action.

BRRR vs. Other Bitcoin ETFs

BRRR primarily stands out from other spot Bitcoin ETFs in terms of fund size, expense ratio, liquidity, and the issuer's reputation. Some other well-known Bitcoin ETFs include:

• Grayscale Bitcoin Trust (GBTC)
• iShares Bitcoin Trust (IBIT)
• Fidelity Wise Origin (FBTC)
• Ark 21Shares Bitcoin ETF (ARKB)
• Bitwise Bitcoin ETF (BITB)
• VanEck Bitcoin Trust (HODL)
• Invesco Galaxy Bitcoin ETF (BTCO)
• Franklin Bitcoin ETF (EZBC)
• WisdomTree Bitcoin Trust (BTCW)
• Hashdex Bitcoin ETF (DEFI)

What Can Influence the Value of Valkyrie Bitcoin?

Understanding the factors that influence Bitcoin's price can help you anticipate the price movements of the Valkyrie Bitcoin ETF, as this ETF closely follows the value of Bitcoin:

• Competition: Since the start of Bitcoin's history, it has faced competition from other cryptocurrencies that offer different features, such as faster transaction speeds or lower fees, challenging its dominance in the market and its price.
• Mining Costs: Bitcoin mining can be costly in the beginning, requiring significant investments in equipment, electricity, and maintenance. Miners need to sell their Bitcoin to justify these expenses, which can influence the value of the BTC.
• Adoption Rate: Compared to other cryptocurrencies like Ethereum (ETHUSD), Bitcoin was created to be a general-purpose currency, so its value depends on people adopting it for trading and spending. As demand increases, so does its potential worth.
• Halvings: Bitcoin's halving events, which reduce the supply of new coins, can significantly impact its value by increasing scarcity and potentially driving up demand.
• Regulation: Cryptocurrency regulation can vary widely across different countries and regions, which can influence the use and value of Bitcoin.
• Global Developments: Events, such as recessions, market crashes, monetary policy or natural disasters, can impact the price of Bitcoin.
• Trader Confidence: Fueled by factors like market sentiment and economic news, can play a significant role in driving Bitcoin price fluctuations.

Pros and Cons of Trading Valkyrie Bitcoin

Bitcoin ETFs offer traders a way to participate in the cryptocurrency market, but it's important to consider both the potential benefits and risks before getting started.

Advantages of Trading the Valkyrie Bitcoin ETF

• Lowering the barrier of entry to Bitcoin for less experienced traders.
• Instead of buying, selling and trading Bitcoin tokens, the Valkyrie Bitcoin ETF offers traders a straightforward way to trade Bitcoin without the complexities of buying the cryptocurrency directly.
• Bitcoin ETFs also allow traders to avoid having to secure their BTC tokens after purchasing them.
• The Valkyrie Bitcoin ETF provides a comfortable framework for traders used to stock exchanges, allowing them to benefit from potential Bitcoin growth through a regulated financial derivative.
• The BRRR ETF provides professional traders a way to integrate Bitcoin into traditional strategies.

Risks and Limits of Trading the Valkyrie Bitcoin ETF

• Unlike Bitcoin, which can be traded around the clock, the Valkyrie Bitcoin ETF follows traditional stock exchange trading hours, which can limit trader activity.
• The ETF's performance may not exactly follow Bitcoin's price changes. These differences between the ETF's performance and Bitcoin's actual price are called tracking errors.
• With Valkyrie Bitcoin ETF, you don't directly own Bitcoin tokens. Instead, you trade in a fund that holds Bitcoin.
• The Bitcoin spot markets are relatively new and lack strict regulation, which can increase the risk of fraud, price manipulation, and other illicit activities.
• This ETF is relatively new, with a limited track record.
• Bitcoin prices are very volatile.

How Can I Trade the Valkyrie Bitcoin (BRRR)?

To trade the Valkyrie Bitcoin ETF, you should first think about your trading style and strategy, like day trading, swing trading and position trading, and work on your trading plan.

To create a successful trading plan, you must first understand your goals, risk tolerance, and time commitment. Choose a market analysis method that suits your preferences, such as fundamental analysis or technical analysis.

You should also think about risk management strategies like using stop-loss orders and position sizing to protect your capital. Develop a disciplined trading mindset that prioritises patience, continuous learning, and emotional control.

Remember, your trading plan should be considered as a flexible document that can be adjusted as needed.

How Can I Start Trading Valkyrie Bitcoin ETF with CFDs on Plus500?

Plus500 is a CFD provider, which means that you can only trade the CFD on the Valkyrie Bitcoin ETF on its trading platform. So to start trading the Valkyrie Bitcoin ETF on Plus500, it's essential to have a solid trading foundation in ETFs, CFDs and cryptocurrency trading.

To minimise risks and gain practical experience, it's recommended to start with a demo account offered by Plus500. This will allow you to practise trading without risking your capital, test your trading plan in a simulated environment, and learn how to trade cryptocurrencies on Plus500.