The first Bitcoin ETF has appeared. What should you pay attention to in the new investment method?

According to CNNMoney, Bitcoin enthusiasts have been trying to find a safe way to invest because they have found huge potential in this cryptocurrency.

In theory, an exchange-traded fund that tracks the price of bitcoin would give investors a slightly safer option, just like the SPDR Gold Shares ETF (GLD), which tracks the price of gold.

Twin brothers Cameron and Tyler Winklevoss have been trying for two years to get regulatory approval for a bitcoin ETF, but the Securities and Exchange Commission is still trying to figure out how to define and oversee bitcoin.

This week, ARK Investment Management announced that it would fully embrace the digital currency Bitcoin. The ARK Web X.0 ETF (ARKW) became the first ETF to invest in Bitcoin.

“The current price (of Bitcoin) presents a very attractive entry point for investors,” Cathie Wood, founder and chief investment officer of ARK, said in a statement.

But before making the leap, the smartest thing to do is to carefully read the fine print of this ETF, which trades under the ticker symbol "ARKW."

First, it doesn’t invest in Bitcoin alone. Despite its claims, the ETF invests in a so-called disruptive technology. The cryptocurrency makes up only a small portion of its investments, which also include Netflix (NFLX, Tech30), LinkedIn (LNKD, Tech30) and athenahealth (ATHN), a company that provides electronic health records online.

It is investing in the security of the Pink Sheet market, not in real Bitcoin. It is reported that stocks traded on the Pink Sheet market do not need to submit reports to the SEC, there are no minimum requirements, the information is not transparent, and they do not have listing status.

Second, the ARK ETF does not invest directly in Bitcoin. It invests in a company most people have never heard of, the Bitcoin Investment Trust.

The company began trading on the pink sheets in May under the ticker symbol “GBTC.” It has a market capitalization of less than $40 million and has very little trading volume.

The pink sheets, also known as over-the-counter markets, are less transparent and subject to less regulatory oversight, making investing in the pink sheets a crazy option compared to investing on the New York Stock Exchange and Nasdaq.

“Pink sheets are an area that most investors are reluctant to venture into,” declared Matt Hougan, CEO of research firm ETC.com.

GrayScale, the company behind the Bitcoin Trust, defended its decision to list on the pink sheets, noting that many large foreign companies, such as Adidas and Roche, are also listed on the pink sheets.

Records are not perfect

Another problem is that the investment does not reflect the true price of Bitcoin, which defeats the purpose of its establishment. Meanwhile, the trust's share price has risen and even soared, even though the underlying price of Bitcoin has been relatively calm.

“You can’t really get Bitcoin here, you can get derivatives of Bitcoin that track the price of Bitcoin, but they’re not real,” Hougan said. “There are a lot of mental leaps that go into this system.”

The ETF company brushed aside those concerns for investors, noting that price volatility is actually a good sign.

Another risk for investors comes from regulators. The trust company has warned investors in multiple disclosure documents that the U.S. Securities and Exchange Commission's rules could threaten the company's future.

Pressure from the market

Of course, there are risks associated with investing in any volatile Bitcoin.

Bitcoin was created in 2009. In 2013, its price peaked at nearly $1,250 after soaring more than 6,000%. Then there was a price crash.

Although the bitcoin market has calmed down recently, it is still down 27% this year to $230.