Cathie Wood, the founder of Ark Invest, has recently warned investors about a particular type of Bitcoin ETF that they should steer clear of. Wood believes that leveraged Bitcoin ETFs are risky and should be avoided. These types of ETFs use borrowed funds to amplify the returns of the underlying assets, which can lead to significant losses if the market moves against them.
Wood’s warning comes at a time when interest in Bitcoin ETFs is growing, with several companies seeking approval to launch their own funds. While traditional Bitcoin ETFs simply track the price of the cryptocurrency, leveraged ETFs introduce an additional layer of risk that may not be suitable for all investors.
Investors looking to gain exposure to Bitcoin through an ETF should carefully consider the risks involved and choose a fund that aligns with their investment goals. By avoiding leveraged Bitcoin ETFs, investors can reduce their risk exposure and potentially protect their investment capital.