How can an ETF’s trading price keep following the assets held by the fund?
Definition: When an authorized participant subscribes, it delivers cash or the corresponding assets to the fund and receives a whole batch of new shares in return; redemption is the opposite.
Why this works: When the premium or discount becomes too large, authorized participants can use subscription or redemption to earn the price difference, and this arbitrage pulls the trading price back near net asset value.
The fund shares of a Bitcoin spot ETF are backed by $BTC actually held in custody by the issuer.
Understand the principle first, then act; don’t make decisions based on intuition.
#BTC
Definition: When an authorized participant subscribes, it delivers cash or the corresponding assets to the fund and receives a whole batch of new shares in return; redemption is the opposite.
Why this works: When the premium or discount becomes too large, authorized participants can use subscription or redemption to earn the price difference, and this arbitrage pulls the trading price back near net asset value.
The fund shares of a Bitcoin spot ETF are backed by $BTC actually held in custody by the issuer.
Understand the principle first, then act; don’t make decisions based on intuition.
#BTC