Blockchain Industry | How Are ETF Shares Created and Redeemed?
ETF shares trade in two markets: regular investors buy and sell existing shares on exchanges, while authorized participants (APs) subscribe to and redeem shares with the issuer in the primary market.
When the premium or discount gets too large, APs can arbitrage by creating or redeeming shares, helping bring the trading price back toward NAV.
The shares of a spot Bitcoin ETF are backed by $BTC actually held by the issuer.
Markets always hold surprises, so decide in advance what you’ll do if your view turns out to be wrong.
#BTC
ETF shares trade in two markets: regular investors buy and sell existing shares on exchanges, while authorized participants (APs) subscribe to and redeem shares with the issuer in the primary market.
When the premium or discount gets too large, APs can arbitrage by creating or redeeming shares, helping bring the trading price back toward NAV.
The shares of a spot Bitcoin ETF are backed by $BTC actually held by the issuer.
Markets always hold surprises, so decide in advance what you’ll do if your view turns out to be wrong.
#BTC