With the introduction of the Bitcoin Exchange Traded Fund (ETF), the American financial market recently achieved a significant milestone. As of January 11, 2024, investors have the opportunity to delve into Bitcoin investment via a Bitcoin ETF.
The buzz around the potential approval of this Bitcoin ETF had already boosted the cryptocurrency’s value by a significant margin in the preceding months. This surge is attributed to the widespread belief among investors that the sanctioning of a Bitcoin-focused hedge fund would propel the cryptocurrency’s value even higher in the years to come.
This guide aims to simplify and explain everything you need to know about the Bitcoin Exchange Traded Fund, especially for beginners. We’ll explore what a Bitcoin ETF is, why its approval is a game-changer for investors, and how it differs from direct Bitcoin purchases. Additionally, we’ll discuss the pros and cons of investing in Bitcoin ETFs, guide you through the process of buying one, and address common questions on the topic.
Briefly:
- An ETF (Exchange Traded Fund) is a type of investment fund that tracks the performance of a specific set of assets (like stocks or bonds) and can be bought and sold on stock exchanges just like a regular stock.
- A Bitcoin ETF is an investment fund traded on stock exchanges that tracks the price of Bitcoin, allowing investors to buy into Bitcoin without owning the cryptocurrency directly.
- How can I make money on a BTC ETF? Like all other assets: trade them in the right place*
*Risk invoiced.
The table below details the ETFs, their expense ratios, and their introductory fee waivers.
NAME | EXPENSE RATIO | FEE WAIVER |
Bitwise (NYSEMKT:BITB) | 0.20% | 0% for first six months for up to $1 billion in assets |
ARK 21Shares (ARKB -6.20%) | 0.21% | 0% for first 6 months for up to $1 billion in assets |
Fidelity Wise Origin Bitcoin Fund (NYSEMKT:FBTC) | 0.25% | 0% through July 31, 2024 |
Valkyrie Bitcoin Fund (BRRR -6.17%) | 0.25% | 0% for first three months |
iShares Bitcoin Trust (NASDAQ: IBIT) | 0.25% | 0.12% for first 12 months for up to $5 billion in assets |
VanEck Bitcoin Trust (NYSEMKT: HODL) | 0.25% | None |
Franklin (NYSEMKT: EZBC) | 0.29% | None |
Wisdomtree Bitcoin Trust (BTCW -5.50%) | 0.30% | 0% for first six months for up to $1 billion in assets |
Invesco Galaxy (BTCO) | 0.39% | 0% for first six months for up to $5 billion in assets |
Hashdex (DEFI -6.51%) | 0.90% | None |
Grayscale Bitcoin Trust (GBTC -5.19%) | 1.50% | None |
What Exactly is a Bitcoin ETF, and What’s a Bitcoin Basket Fund?
An Exchange Traded Fund (ETF) is a type of financial instrument designed to passively track the performance of indices across stocks, commodities, or bonds. While ETFs strive to mirror the returns of the assets they track, it’s crucial to note that there can be slight variations in performance.
A Bitcoin Exchange Traded Fund, specifically, is an investment fund that aims to replicate the performance of Bitcoin as closely as possible. This approach allows investors globally to invest in Bitcoin in a straightforward manner, bypassing the need for extensive knowledge about the cryptocurrency sector. Investors won’t have to worry about managing crypto wallets or remembering wallet passwords.
Before 2024, the U.S. market lacked a Bitcoin ETF, making its approval a significant breakthrough. With this innovation, investing in Bitcoin through an ETF has become as straightforward as investing in well-known indices like the S&P 500.
Where Can You Purchase a Bitcoin ETF?
1.Via Foreign Brokers: Platforms like Tradestation and Interactive Israel also provide access to Bitcoin ETFs on the U.S. stock exchange. Check our selected broker’s list here.
Broker | Evaluation | Functions | Benefits | Spread | Leverage | Total Fees | Visit Provider |
|---|
 | 4.8 | CFDs: Crypto, Indices, Forex, Commodities, Shares, Options, ETFs |
| Tight Spreads | 1:300 | No internal deposit fee |
 | 4.4 | • FX
• Metals
• Indices
• Cryptocurrencies
• Stocks
• Energies
|
| Tight spreads starting from 0.0 | 1:400 | Depending on payment method |
 | 4.2 | 49 global currency pairs, commodities, index CFDs, stock CFDs, ETFs, metals, commodities, energy |
| Tight Spreads | 1:1 – 30:1 | No fees |
 | 4.0 | 1000+ financial instruments, including Foreign Exchange, Commodities, Indices, Share CFDs, Cryptos, ETFs, and Bonds |
| 1.27 | 1:500 | $3 per side for every 100,000 units |
 | 3.9 | 70 crypto-pairs, 49 forex pairs (usdzar as well), 5 metals, 26 Indices, 130 stocks, 6 oil and gas, 6 agriculture assets |
| Spreads from 0.00 | 1:999 | 3% + inactivity fee |
2. Through Banks (commission applies): While possible, purchasing through banks is generally less advisable due to higher transaction and management fees.
Why Is Bitcoin ETF Approval Crucial?
- Market Influx: The approval and trading of Bitcoin ETFs on the U.S. stock exchange simplify Bitcoin investment, attracting both individual and institutional investors and potentially boosting the cryptocurrency’s value.
- Accessibility: It makes investment in the cryptocurrency more accessible, reducing concerns about direct coin management.
- Market Legitimacy: Its approval underscores Bitcoin’s staying power in the financial market, despite previous hesitations due to security concerns in the crypto field.
- Increased Trading Volumes and Liquidity: The ETF’s introduction is likely to lead to higher trading volumes and liquidity for Bitcoin, benefiting its overall market.
Differences Between Bitcoin ETFs and Direct Bitcoin Purchase
- Management Fees: Bitcoin ETFs come with management fees, whereas direct Bitcoin investments do not incur such costs.
- Exposure Method: While a Bitcoin ETF aims to replicate Bitcoin’s return, direct investment provides the exact return of the cryptocurrency.
- Security Requirements: Bitcoin ETF investors are not responsible for coin security, unlike direct Bitcoin holders.
- Currency Transferability and Usage: Direct Bitcoin ownership allows for transferability and usage in transactions, which is not possible with Bitcoin ETFs.
- Simplified Security
- No Need for a Cold Wallet
- Ease of Investment
- Regulated and Structured Investment
- Currency Transferability and Usage
- Annual Management Fees
- Lack of Direct Control
- Potential Centralization Risks
- Vulnerability to Changes in Management Fees
How to Purchase?
- Open a Trading Account: To invest in a Bitcoin ETF, you’ll need a trading account in the U.S. capital market.
- Deposit Funds: After opening an account, deposit funds to begin trading.
- Select: Research and choose a specific Bitcoin Exchange Traded Fund you wish to invest in.
- Search and Buy: Find the ETF in your trading system and place a buy order.
- Complete the Purchase: Wait for your purchase order to be executed.
List and Management Fees
Various Bitcoin ETFs are available, each with different management fees. These fees can range from 0.20% to 1.5%, depending on the ETF.
Investing in Bitcoin as a Beginner
For beginners, investing in Bitcoin through an ETF might be the simplest option, though it’s important to understand the limitations compared to direct ownership.
Other Cryptocurrency ETFs
Currently, only Bitcoin ETFs are expected to be approved, with potential future expansions to other cryptocurrencies.
Conclusion
This guide aims to provide a comprehensive overview of Bitcoin ETFs, helping you make informed investment decisions.
We think that the changing news is the acceptance of bitcoin in the US and its accessibility to non-crypto investors in banks. And it’s boring for the real crypto investor.
If you are looking for other crypto signals and advice, be sure to check out our partnership with GreenBull.AI on Telegram.
*Note: The information provided is for educational purposes only and should not be considered investment advice.
Interested in More?
Check out our additional guides and reviews
1. BEGINNERS GUIDE ON HOW TO BUY CRYPTOCURRENCY
2. BITCOIN SAVING PLAN: CAN YOU BUY BITCOIN ETFS?
3. CRYPTO FUNDS: HOW TO INVEST IN THE CRYPTO MARKET
*This content is based on the author’s personal opinions and is not a trading or investment recommendation.
